London is the world's major gold trading Market and settlement center, also is the world's largest and oldest gold market. 1804, London take over Amsterdam, the Netherlands became the center of world gold trading. The London gold market in 1919 was established for each trading day morning ( 7:30 London time ) and afternoon ( 3:00 p.m. London time ), two times (Fixing) bythe top five gold traders of London Bullion Market Association ( LBMA ). Different from other gold market, it is only for the market traders to buy or sell gold to provide a quotation.
London gold is spot market and will be settled in London, since there is no actual market centre in London, gold trading over the counter in the form mainly through ( OTC ) - the major gold dealers use the electronic trading system or telephone to complete the deal. London gold trading does not involve cash settlement but deal over the account. On due date, customer has to pay interest atthe agreed rate, but without gold delivery.
After World War II Zurich gold market developed as the international gold market, second to London. In 1968, the United States subject to the Vietnam war, rampant speculation in gold, central banks suspended Gold Pool operation, London gold market is also closed for two weeks. During the closure of the London gold market, Credit Suisse, Swiss Bank and Union Bank of Switzerlandhave set up gold vault in Zurich, South Africa began to sell gold through the Zurich vault on a regular basis.
Zurich gold market has no formal structure, and only through three major Swiss banks ( Credit Suisse, Swiss Bank and Union Bankof Switzerland ) for gold trading and settlement.
Zurich gold market has no price fixing system, the price will be fixed according to supply and demand of the gold market in each trading day. The price will be traded freely related to the subject level and without restrictions.
New York Mercantile Exchange ( COMEX ) and Chicago Mercantile Exchange ( CME ) is the world's largest gold futures trading center. Since the beginning of year 70 , U.S. dollar devalued twice, Americans in order to hedge their investment value, they tradethe gold futures for profits, during that time New York and Chicago gold market have developed rapidly.
These two exchange centres only provide a venue and facilities for investors, they formulate some regulations to ensure fair,assurance, reasonable transactions to both parties , they do not participate in futures trading. Exchange centres have detailed description.on gold weight, fineness, shape, price volatility, transaction date and time on their spot and future trading, of which they have a great impact on gold prices.
In 1974, Hong Kong government abolished import and export controls on gold, led to the rapid development of Hong Kong's gold market. In order to cover gold markets close in New York, Chicago and London, the five London gold dealers and large threeSwiss banks have set up offices in Hong Kong to further trading gold activities..So gradually formed an invisible local Londongold market to promote Hong Kong as the world's major gold market centre..
Local London gold market does not involve physical gold settlement and there is no specific number of contracts or trading rules,but only manipulate with credit arrangements between both parties.
The Chinese Gold & Silver Exchange Society ( CGSE ) is based on the dominant Chinese gold dealers of trading sites. It was founded in 1910, marking the formation of the gold market in Hong Kong.on the trading floor members or their representativestrade with open outcry in Cantonese, supplemented by hand signals. Although trade in spot market, based on the principle of overnight delivery, speculators can pay the overnight interest fees, settlement will be delayed until the following day, or even indefinitely deferred until the position is closed, so the trade market is a combination of cash and futures market as one.
There are two exchange trading of gold purity, , namely 99% - the weight of 5 troy gold bars ( 99 K ) and the purity of 999.9% - the weight of 1 kg of gold ( kilogram ). 99 K trading unit is 100 per troy, its lowest price change is 50cents, the kilogram trading unit is per 5 kg, the lowest price change is 1 cent. All the quotation and settlement in gold trading is base on Hong Kong dollar.