Gold trading and how to benefit from price movements in light of economic turmoil

Gold trading is one of the most important commodities that investors focus on to trade in the financial markets, and for this reason, many tools have been developed that help make the trading process look easier and faster, and one of the most important of these tools is trading gold on the futures exchange, which has witnessed development over the past years. .

But there are many traders who do not know how to trade gold on the futures exchange and the “CME” group, which is one of the largest global markets for trading all commodities futures.

gold trading

gold trading

How does gold get to the futures exchange?

Extraction process and alloy production:

At first, the gold is extracted from the mines by the refining companies, then it is purified and alloys are made through the laboratories and refining companies with international standards, and thus the gold becomes ready.

Those ingots are owned by the refining companies that bought them from the mines or the companies that refined or refined them to other companies.

The transfer process:

After preparing the gold bullion according to international standards, the other process comes, which is the transfer process to the warehouses of the futures exchange “COMEX” through safe companies specializing in highly accurate security systems, which are located in Richmond, namely “Brinks”. Via Mat International, the transfer process is carried out through trusted and accredited companies.

Editing delivery receipts to start trading in the stock exchange

After the bullion reaches the warehouses of the futures exchange, it is ready for gold to be traded in the stock exchange, where the delivery receipts are released, which are like title deeds that are transferred from one party to another. Usually, these receipts remain with the brokerage companies that supervise the trading operations.

The relationship between gold stocks and price movements

There is a direct relationship between gold stocks on the Comex Stock Exchange and its prices. When gold prices fall, the stock tends to decline.

How is gold future contracts traded?

Futures trading is an agreement to buy or sell a specified amount at a specified time in the future and to agree on its price in advance.

The main motive that makes companies operating in gold, whether working in miners or jewelry makers, resort to trading in future contracts is to hedge against price fluctuations, and traders resort to trading in futures contracts in order to achieve profits from high or low prices.

For this reason, most deals close ahead of schedule, not only on gold contracts, but all other commodity contracts, so most of the market participants are traders, and companies operating in gold trade in futures contracts in order to hedge against price fluctuations.

Mohamed Abdel Khaleq
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