About Gold Futures

Gold is one of the most valuable metals in the world.

Naturally, with gold being one of the first metals to draw human attention, it is also traded in the futures market.

To assist institutional traders and professionals to enter the market, Orient Futures Singapore currently provides gold futures trading for DGCX, COMEX, TFEX, and JPX exchanges.

Apart from these exchanges, Orient Futures is also an exchange member of APEX, which offers gold perpetual futures contracts. Founded in 2018, APEX is a derivatives exchange regulated by the Monetary Authority of Singapore.

Without further ado, this article features more insights about the market:

 

5 Things To Know About Gold Futures

1. Major Gold Exchanges

Within the gold trading hubs, the world gold council estimates that up to 90% of global trade is in the London OTC market, the US futures market, and the Shanghai Gold Exchange. Some of the key recent updates from the exchanges are as follows,

LME

In the past, the London market (LME) has historically been a contributor to a large share of trade for metals. However, it is announced by the exchange that due to the low levels of trading, LME gold is set to close and withdraw from 11 July 2022.

COMEX

Apart from LME, there is a steadily increasing share of the US futures market (COMEX) volume that is transacted during Asian market hours.

SGE and SHFE

Additionally, the Chinese markets (SGE and SHFE) are also emerging with active futures due to increased focus on internationalized trading. To that end, plans such as the “Shanghai Gold Benchmark Price” was launched in 2016 to regulate trade and may open to more international traders in the future.

If any traders are planning to invest in any one of these 3 exchanges, it is essential to check which one is offered by the broker of choice.

Orient Futures provides access to a variety of exchange markets and micro gold futures too, if you desire to trade any products not listed, contact us here.

 

 

2. Interest Rates

With rising interest rates across the globe, some turn to interest rates as a factor.

This is increasingly an area of concern as FED raises interest rates by 0.75 percentage points, a move regarded as the “largest increase since 1994”.

However, the influence of the rise in interest rates and its effects on the gold market is up for debate. On one hand, Investopedia had previously established that “there is no historical data that suggests that a relationship exists between rates and gold.”

On the other hand, other news outlets have suggested that “the value of gold is theoretically linked to real interest rates”, and prices fell “ahead of a widely expected big interest rate hike from FED”. 

Therefore, in view of current interest rate changes, traders may want to monitor the market for possible price movements.

 

3. Demand and Supply Of Gold

Apart from understanding the exchanges and interest rates, demand and supply is also a crucial factor for price changes.

Gold prices retain their value over centuries while currencies are susceptible to rise and fall. Hence, they are purchased by countries as a hedge against unprecedented events such as conflicts, natural disasters, or recession.

In recent events, CNBC reports that gold prices surged to multiyear highs in the early days of the Covid-19 pandemic.  As cases spread internationally, investors and traders turn their attention toward gold as a safe store of wealth.    

Additionally, in Business standard news, it is reported that Russia’s invasion of Ukraine had also led gold prices to spike. This is due to the increased demand for metal as a hedge against economical and geopolitical consequences.

In general, demand for gold has increased while the supply of gold has not increased drastically based on the historical data shown by the international gold organization.

Overall, traders and investors should be aware that demand and supply are affected by macroeconomic factors as well as microeconomic ones, other factors that could affect prices include employment wages, and consumer confidence.

 

4. Economic Conditions

Certain economic data and statistics can drive the government to make decisions on the next move. For example, low unemployment, job growth, and economic expansion signify a positive economic climate. This can allow countries to tighten monetary policies that lower gold prices.

 

5. Rising Prices From Currency Fluctuations

Price fluctuations in one currency or another can lead to an increase in gold prices. For example, gold is traded in USD in the international market and Singapore-dollar conversion can impact the price due to the difference in value.

This can be clarified or checked on by platform and brokerage services. For more information about such services, refer to the access the futures market article here.

Therefore, currency fluctuations and gold prices are often tied to one another and should be monitored based on the currency exchanged when trading futures.   

 

Start Trading With Orient Futures Today

At Orient Futures, we provide traders and hedgers with access to the world’s major futures exchanges, including China’s market.

Being a direct Overseas Intermediary of INE (Shanghai International Energy Exchange), Dalian Commodity Exchange, and Zhengzhou Commodity Exchange, you can enjoy direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.

We provide premium service at an affordable cost to all our clients, being there for you 24 hours on trading days to providing a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.