Trading Gold Futures Shocking Secrets
Know these shocking secrets about gold markets. Gold prices have been rising for the last many years. Rather there has been a bull gold market for the last decade. When speculator see gold prices increase consistently, they view it as a sign of rising inflation. The foremost job of every Central Bank in the world is to fight inflation. Central Banks don't want this perception or expectation to set in about rising inflation in the economy. So when they see gold price rallying higher and higher, they usually step in and start selling gold from their large reserves. Thus ensuring that its price falls and does not rise more!Get the Ultimate Swing Trading Software and learn this 10 minutes a day swing trading strategy that works for forex, stocks, futures, options and ETFs. Get this FREE Penny Stock Trading Report that tells the story of James Connelly and how he turned $1K into $1M in just 30 days with only 38 trades investing in penny stocks. Learn how you too can repeat this feat! Know this shocking Dow Futures secret that can make you rich.
So central banks tend to be sellers of gold rather than its buyers. Now this does not mean that gold prices cannot rally for a long time. What this means is that the days of gold prices skyrocketing like that in the 19th century are over. Central Banks don't want this to happen. This makes gold market rather a tricky market.
Gold prices are heavily influenced by political crisis and political upheavals. In times of political crisis, gold prices tend to rally higher. South Africa is the world's largest gold exporter. It accounts for more than 25% of the gold exports in the world market. South Africa is followed by Russia, United States, Canada, Australia and Brazil. Remember the California gold rush of 19th century. Many people went, many kept on digging and only a few found gold. Now the days of gold rushes are over. Almost all the gold mines have been discovered.
Inflation is considered to be bad for the economy. It makes prices go up. When prices go up, money loses it's value. So many wealthy investors start converting their cash assets into gold and other assets that have a negative correlation with inflation. US Dollar and gold prices tend to move in opposite direction. Gold is popularly known as Anti Dollar. However, this negative corraltion relationship maynot hold in the short term but it definately does hold in long run.
There are many exchanges in the world where gold gets traded. The most popular is the New York Mercantile Exchange (NYMEX). The second most popular is the Chicago Board Of Trade (CBOT). GOld futures on CBOT have relatively low margin requirements. This makes trading gold futures highly attractive for retail traders. The international benchmark for gold is the London Price Fix. London Price Fix is quoted in troy ouncestwice daily known as A.M Fix and the P.M Fix and is set in US Dollar.
Mini contracts also get traded on CBOT. These are smaller versions of the regular contract with much lower margin requirements. Mini contract hold 33.2 troy ounces of gold as compared to the 100 troy ounces in the regular contract. However, the general characteristics and fundamentals of the market are the same. Gold trading combined with forex trading can be a lucrative combination!
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