Comments on: Over the Hedge and Underground https://twentythirdfloor.co.za/2006/10/04/over-the-hedge-and-underground/ Perspectives Sun, 04 Feb 2007 13:24:52 +0000 hourly 1 https://wordpress.org/?v=6.9.1 By: david.kirk https://twentythirdfloor.co.za/2006/10/04/over-the-hedge-and-underground/comment-page-1/#comment-460 Sun, 04 Feb 2007 13:24:52 +0000 http://www.twentythirdfloor.co.za/blog/2006/10/04/over-the-hedge-and-underground/#comment-460 Gold is traded around the world in spot and derivative markets; it’s not even that clear to know what “the” daily price is. Different time-zones will have different market-close prices, but since trading continues around the world there is no reason to favour one closing price over another.

In general, the movement in the gold price is not limited. Because it is a commodity, traded around the world, it is difficult for exchanges to impose rules that limit how far the price can move. There may be more rules on some of the derivate markets though.

But these limits only apply in extreme market circumstances. If one is truly hedging the exposure for operational purposes, there should be no need to be trading regularly.

]]> By: John Corey https://twentythirdfloor.co.za/2006/10/04/over-the-hedge-and-underground/comment-page-1/#comment-421 Fri, 02 Feb 2007 12:03:08 +0000 http://www.twentythirdfloor.co.za/blog/2006/10/04/over-the-hedge-and-underground/#comment-421 The price of gold is fixed on a daily basis. Do you know if the fixing has any cap or other limit for a 1 day movement? Or is the price allowed to freely move up or down independent of the prior day’s price fix? I suspect the later and the implications to hedging.

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