Major Characteristics
- Gold (Chemical Symbol-AU) is primarily a monetary asset and partly a commodity.
- Gold is the world's oldest international currency.
- Gold is an important element of global monetary reserves.
- With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of high-karat jewellery.
- Less than one-third of gold's total accumulated holdings are used as 'commodity" for jewellery in the western markets and industry.
Demand and Supply Scenario
- Global gold demand was impressive in 2011 with the volume growing to 4574 MT.
- Investment was the main driver of growth, although jewellery and technology were resilient in the face of higher gold prices.
- Record mine production was offset by lower recycling activity and significant central bank purchases.
- Demand for gold bars and coins accelerated as a result of concern over the financial health of the Eurozone, high inflation in some countries, positive price expectations, and relative poor performance of a range of alternative investments.
- In 2011, gold mine production increased by 83 MT to 2822 MT; a third year of growth and a second successive all-time high.
Global Scenario
- London is the world's biggest clearing house.
- Mumbai is under India's liberalised gold regime.
- New York is the home of gold futures trading.
- Zurich is a physical turntable.
- Istanbul, Dubai, Singapore, and Hong Kong are doorways to important consuming regions.
- Tokyo, where TOCOM sets the mood of Japan.
Indian Scenario
- India is the largest market for gold jewellery in the world and a key driver of the global gold demand.
- The domestic drivers of gold demand are largely independent of outside forces. Indian households hold the largest stock of gold in the world. Two thirds of the Indian demand for gold comes from the rural parts of the country.
- In 2011, gold’s role as an inflation hedge bolstered its appeal in India.
- The nation witnessed jewellery and investment demand of 933.4 MT.
- The nation was by far the largest single investment market in 2011 and accounted for 25% of the total bar and coin demand. India imported a record 969 MT of gold in 2011.
Factors Influencing the Market
- Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
- Hedging interest of producers/miners.
- World macroeconomic factors such as the US Dollar and interest rate, and economic events.
- Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
- In India, gold demand is also determined to a large extent by its price level and volatility.
Measurement
Weight Conversion Table
| To convert from | To | Multiply by |
|---|---|---|
| Troy ounces | Grams | 31.1035 |
| Million ounces | Tonnes | 31.1035 |
| Grams | Troy ounces | 0.0321507 |
| Kilograms | Troy ounces | 32.1507 |
| Tonnes | Troy ounces | 32,150.70 |
| Kilograms | Tolas | 85.755 |
| Kilograms | Tolas | 26.7172 |
| Kilograms | Bahts | 68.41 |
| Troy ounces | Grains | 480.00 |
| Troy ounces | Avoirdupois ounces | 1.09714 |
| Troy ounces | Penny weights | 20.00 |
| Avoirdupois ounces | Troy ounces | 0.911458 |
| Short tonne | Metric tonne | 0.9072 |
Purity
Gold purity is measured in terms of karat and fineness :
Karat : pure gold is defined as 24 karat
Fineness : parts per thousand
Thus, 18 karat = 18/24 of 1, 000 parts = 750 fineness
Gold Guinea :
January 2013 Contract Onwards
Gold M :
January 2013 Contract Onwards
May 2013 Contract Onwards