Sunday, April 08, 2007

Gold Markets

There are basically five major gold markets around the world. These are New York, London, Zürich, Hong Kong and Sydney.

It should be noted here that the London Bullion Market is sometimes confused with the London Metal Exchange which is quite different. Only gold is traded at the London Bullion Market while other metals, other than gold, are traded at the London Metal Exchange. So gold is considered as a metal by itself in these terms.

The price of gold is actually determined twice a day in London. Here a group of bankers get together and 'fix' the price of gold or in other words, decide what the price of gold is going to be at those particular moments when they decide the price. Of course the price then changes by the hour and moves up and down depending on various influences and perceptions of the value of gold. The reason for the fix is more to add stability and as a stable price twice a day for the banks to work on. A sort of guidepost for the day you might say. The price fix is actually determined in Pounds Stirling and is then converted, by various markets, into the currency of their country. Commonly, around the world, the price of gold is perceived in US dollars and Euros.

Each market have their own operating times depending on the time zones and this means that gold can be traded more or less around the clock. There is much trading between the markets as a result.

The value and price of gold varies depending on various factors. Some of these factors are, The value of various currencies, particularly the US dollar. The price of other commodities, The oil price, the economic situations and changes in those situations around the world. World events, such as wars and even dramatic weather influences, such as earthquakes, tidal waves etc.

The biggest influence of course is the perception of the value of gold as against their currency. There are hundreds of analysis on a daily basis busy writing on what they think the gold price is going to do, go up or down or remain steady. In the final analysis no one can predict with 100 percent certainty if the value of gold will go up or down. In the long term, one can see historically that gold has always gone up. Provided there is inflation, currency manipulation, economic upturns and downturns it would be safe to say that, in the long term, gold will continue the trend it has had over the past 100 years. It can be confusing to decide what to do, either buy gold or sell gold or just keep what one has.

Also you can ask the question, what sort of gold should one buy? Bullion in the form of coins or bars? Or buy into shares or gold producers or Exchange Traded Funds? Each have their advantages and disadvantages. Coins and bars are mainly for those keen to store up value and are really more for the long term storage or investment purposes.

Easier to move on a shorter term such as daily, or even on an hourly basis, are stocks in gold companies and such items as exchange traded funds where a bank might hold gold stocks and you buy and sell a slice of that gold which is represented by an account you have with that bank.

Buying and selling stocks in gold companies and gold producers is more volatile and done on the markets through share brokers or if you use a fund through fund managers.

Here is a list of the five main gold markets around the world.

Market hours (local time)
2:00 PM - 8:00 AM Mon-Thu
7:00 PM - 8:00 AM Sun.

After-hours futures trading is conducted via the NYMEX ACCESS electronic trading system beginning at 2:00 PM on Mondays through Thursdays and concluding at 8:00 AM the following day. On Sunday, the electronic session begins at 7:00 PM. All times are New York time. Trading is in US Dollars

Market hours (local time)
8:30 AM - 4:00 PM, with Fixing at 10:30 AM and 3:00 PM.

As mentioned before, here the metal prices are fixed twice a day, known as London Fixes, these are the guidepost for the official gold trading around the world. Trading here is in British Pounds Stirling

Market hours (local time)
8:00 AM - 5:00 PM.

The three biggest banks in Switzerland pool their gold for the purposes of this market. The Euro is the currency used here.

Hong Kong
Market hours (local time)
8:30 AM - 12:30 PM
2:30 PM - 5:30 PM.

Hong Kong is the center of gold trading for the Far East and the Southeastern Asia region. The Hong Kong Dollar is used here.

Market hours (local time)
9:00 AM - 3:00 PM.

Australia's geographical location is ideally placed time zone wise to maintain the continuity of the spot gold market after New York traders go home and before the Asian traders wake up. Sydney opens up just after the NY market closes and is still open when the Hong Kong market opens. The Australian Dollar is traded here.

In addition the gold price is shown in US Dollars and Euros around the world in all markets.

Gold is, indeed, a very popular metal and the gold markets are very active places with many millions of dollars of gold being traded on a daily basis.

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