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Gold doesn’t appear in markets out of thin air. It starts with mining operations that require considerable time, labor, and capital. After extraction, it must be refined, certified, and transported before it’s ready for trade.
Each stage involves cost, coordination, and risk. As a merchant or trader, becoming skilled in gold trading means understanding every detail of its journey. From how it’s sourced and processed to how it's priced and exchanged across global markets, every step matters.
First, it must be found. Mining is the first and perhaps most physically demanding part of the gold supply chain. It starts with geological surveys and exploratory drilling to locate gold-bearing rocks.
Gold mining requires heavy equipment, skilled labor, government permits, and strict adherence to safety and environmental regulations. From large-scale open-pit mines to deep underground operations, the process demands both time and money. In many regions, the cost of extraction can be high, especially when considering fuel, machinery maintenance, and water usage.
The volume of gold available in the market is directly linked to these efforts. When mining becomes more expensive or difficult, supply tightens. That’s why understanding the mining process is key to understanding the dynamics behind gold’s long-term value.
Once gold is extracted from the earth, it isn’t immediately ready for sale. The raw material contains impurities and must go through a refining process to reach investment-grade purity. Depending on the method used; smelting, chemical leaching, or electro-refining, the goal is the same: to separate gold from other metals and bring it to a high purity level, usually 99.5% or higher.
After refining, the gold is poured into bars or coins and stamped with required details such as purity level, weight, and a serial number. These markings show the metal's authenticity and origin, allowing it to be accepted by dealers, banks, and international exchanges.
Most globally recognized gold bars come from refiners that meet strict industry standards, like those on the LBMA Good Delivery List. This ensures that the gold can be traded or stored without the need for further verification, making transactions smoother and more secure.
Moving physical gold from one location to another is not as simple as shipping a regular package. Shipping gold, from refineries to central banks or across borders for trade, always requires tight security, detailed paperwork, and careful coordination.
Air freight is the fastest method. It’s often preferred for high-value transfers, but it comes with higher costs and strict weight limits. Sea transport is cheaper for large volumes but takes longer and increases exposure to delays or geopolitical disruption.
In both cases, insurance is mandatory, and most shipments are handled by specialized logistics firms that deal specifically in precious metals.
Governments and customs authorities are also involved. Any gold shipments must comply with local and international regulations. Anti-money laundering rules and import-export licenses are just some of them. Despite all precautions, incidents like theft, misrouting, and even political seizure remain a possibility.
After gold is mined, refined, and transported, it enters the global marketplace. These markets act as price-setting hubs and physical exchange points where gold is bought, sold, stored, or re-exported. Some operate as formal commodity exchanges, while others are traditional trading centers with deep cultural roots. Together, they form the backbone of gold’s liquidity and global pricing.
The London Bullion Market is the world's leading over the counter (OTC) gold trading venue. It dates to the 17th century, but its modern structure was formalized in 1919 with the introduction of the "London Gold Fixing," a process that still influences global pricing today. The market is administered by the London Bullion Market Association (LBMA). It sets global standards for refining, vaulting, and transaction integrity.
Unlike exchange-traded systems, the London market operates on a principal-to-principal basis between members. Trades are settled through allocated or unallocated accounts in high-security vaults located within London. The LBMA’s Good Delivery List remains the benchmark for gold bar acceptance worldwide, and its influence stretches far beyond the UK.
The Commodity Exchange (COMEX), now part of the CME Group, is the primary platform for gold futures and options trading in the United States. Established in 1933 and headquartered in New York, COMEX offers standardized contracts that allow traders to speculate on or hedge gold prices without physical delivery. Most contracts are cash-settled, although delivery is possible if conditions are met.
COMEX plays a central role in shaping short-term gold sentiment. Speculative positioning by hedge funds, asset managers, and institutional players often drives price volatility. Market participants monitor weekly CFTC reports to understand positioning trends. While COMEX itself doesn't handle physical gold the way London does, its influence on pricing and expectations is undeniable.
Founded in 2002 under the direct oversight of the People's Bank of China, the Shanghai Gold Exchange (SGE) was designed to bring transparency and structure to China’s domestic gold market. Today, it is the largest physical gold exchange in the world by volume, handling spot, deferred, and leasing contracts denominated in yuan. Unlike COMEX or OTC markets, the SGE focuses on physical delivery, making it highly relevant for bullion traders and refiners.
The SGE also introduced the Shanghai Gold Benchmark Price in 2016, an attempt to create a local alternative to the London benchmark. While international access remains limited due to capital controls, China’s massive gold demand ensures that the SGE remains a dominant force in global flows. All gold traded through the SGE must be at least 99.99% pure and meet its strict quality control standards.
The Dubai Gold Souk, located in the city’s Deira district, is one of the most famous gold trading hubs in the Middle East. Although the gold trade has existed in Dubai for centuries, the Souk in its current form started gaining global attention in the 1940s and 50s. With its open-air design and dense cluster of gold shops, the market handles both retail and wholesale transactions daily.
What sets Dubai apart is its business-friendly policies. The emirate offers zero VAT on gold exports, easy access to logistics, and proximity to both African suppliers and Asian buyers. Dubai also introduced the Dubai Good Delivery Standard, giving regional refiners a benchmark like the LBMA. While the Souk is deeply traditional in appearance, its trading activity connects to a fast-moving international supply chain.
The Istanbul Grand Bazaar was established shortly after the Ottoman conquest of Constantinople, around 1461. It has long served as a center of commerce, and its gold section remains one of the most active in the region. Unlike centralized exchanges, the Grand Bazaar operates as a loose network of individual gold dealers and workshops.
Gold bars and coins sold in the Bazaar often pass through multiple hands such as refiners, wholesalers, artisans, and retailers. All within walking distance. Prices are updated minute by minute using FX tickers and live market data screens inside shops. Istanbul’s location between Europe and the Middle East gives it a natural advantage in both physical gold trade and arbitrage. Many traders from nearby countries visit the Bazaar for bulk purchases and cash-based deals.
Switzerland processes around 70% of the world’s gold each year, and Zurich is at the heart of this operation. Though the city doesn’t have a public gold market like London or New York, it is home to major refineries such as Valcambi, Metalor, and PAMP. Most gold imported into Switzerland is refined to 99.99% purity and then exported, mainly to Asia.
Zurich serves as a discreet but powerful node in global gold flows. Its financial system, low tax environment, and secure vaulting services make it a trusted location for institutional clients, central banks, and wealth managers. The market runs quietly, with over-the-counter deals conducted through private banks and specialized bullion desks.
Zaveri Bazaar in Mumbai is India’s most important precious metals trading hub. With a history going back over 200 years, the bazaar handles a mix of physical gold imports, local fabrication, and wholesale distribution. It connects directly with India’s large network of jewelers, especially ahead of major festivals and wedding seasons when demand peaks.
India is one of the world’s top consumers of gold, and Zaveri Bazaar reflects that scale. Most of the gold here is imported under government-monitored schemes and then channeled through large dealers. Price setting is influenced by global rates, currency fluctuations, and local taxes such as import duties and GST. Traders here often hedge their physical positions using domestic futures on the Multi Commodity Exchange (MCX).
Singapore has emerged as a modern, well-regulated center for precious metals trading in Asia. After removing sales tax on investment-grade bullion in 2012, the city-state quickly attracted storage providers, refineries, and trading firms. Its reputation for political stability, strong infrastructure, and legal transparency has made it a hub for gold-backed ETFs and institutional storage.
The Singapore Bullion Market Association (SBMA) plays a key role in maintaining standards and promoting cross-border trade. Most gold in Singapore is stored in high-security freeports, allowing for tax-free movement in and out of the country. While the market is smaller than London or Shanghai, it continues to grow as a trusted gateway for Asian investors and wealth managers.
For centuries, gold changed hands in its physical form, stored in vaults, traded in markets, and exchanged in coins or bars. Today, that same value can be accessed in seconds through a screen. Thanks to modern financial platforms, traders no longer need to handle physical gold to benefit from its price movements.
Digital gold trading comes in several forms. CFDs (Contracts for Difference), ETFs (Exchange Traded Funds), and gold futures are among the most common tools. CFDs allow traders to speculate on gold prices without owning the underlying asset, often with leverage and low capital requirements.
ETFs, on the other hand, offer exposure to physical gold through publicly traded shares. Futures contracts are more advanced instruments, typically used by institutions or experienced traders for hedging and speculation.
This shift to digital trading has made gold more accessible and liquid than ever. With just a trading account and a chart, traders can go long or short on gold within seconds. While physical gold still plays a role in storage and long-term wealth preservation, digital gold is now the preferred format for short-term strategies and market exposure.
Digitalization has opened the doors for millions of participants to access the gold market without ever holding a single gram. Investors now turn to instruments like ETFs and futures, while traders use gold and gold-related CFDs. These products are widely available through trading platforms and ETF portals, making gold as easy to buy as a stock. At the same time, speculative and short-term interest in gold has increased, especially during periods of market stress or rising inflation.
But here's the catch! Most of this new demand never touches the physical market. When someone opens a CFD or buys a synthetic gold product, there is usually no physical delivery involved. That means increased trading volume doesn't always lead to tighter supply in the real-world gold market. If the same level of demand were directed toward actual physical gold, global inventories would be under pressure, and prices could spike dramatically.
In a way, digital gold trading acts as a pressure valve. It allows for increased participation without immediately distorting physical supply chains. Still, when panic buying occurs in both physical and digital markets at the same time, gold can rally fast, as seen during crises like 2008 or early 2020. In those moments, even ETFs and vault storage firms have struggled to keep up with real delivery needs.
Gold is often seen as a trusted asset, but its price behavior tells a different story. While it holds long-term value, gold frequently experiences sharp intraday moves.
Extended trends that can catch both investors and traders by surprise. Its price reacts to a wide range of factors such as economic data, global events, central bank policies, and shifts in market sentiment.
One of the key reasons behind this volatility is that gold generates no yield. It doesn’t pay interest or dividends, so during times of low rates or currency debasement, investors turn to gold as a store of value. But when rates rise or the dollar strengthens, gold can fall out of favor quickly. This push-and-pull dynamic has always existed, but in recent years, it has intensified due to algorithmic trading and leveraged instruments.
Leverage adds another layer of instability. Many retail and institutional traders use margin when trading gold CFDs or futures. As a result, even small price moves can trigger margin calls and forced liquidations, leading to exaggerated short-term volatility. This becomes more noticeable during uncertain events such as central bank announcements or geopolitical shocks, where prices can spike or crash within minutes.
Trading or dealing in gold involves more than just watching the price chart. Everyone in the gold value chain, including miners, refiners, exporters, and brokers, faces risk. Gold prices can shift suddenly due to interest rate changes, currency moves, political events, or fluctuations in physical demand. Without a strategy, businesses can be caught off guard and face unexpected losses.
Holding physical gold or trading it through financial instruments both come with price exposure. To manage that risk, many professionals rely on two practical methods: hedging and price fixation.
Hedging is the practice of opening an opposite position to reduce the impact of price movement. For example, a jeweler expecting to receive gold in 30 days might open a short position in gold CFDs or sell a futures contract at today’s price. If the market drops before the gold arrives, the hedge helps offset the loss in value on the physical side.
Hedging is not about increasing profit, it’s about protecting existing value. It's frequently used by exporters, wholesalers, or manufacturers who deal with long settlement cycles and need price certainty. In a volatile market, proper risk management brings operational stability.
Today, forex and CFD brokers offer various tools for real-time hedging through gold CFDs and flexible account setups. This allows businesses to manage risk more actively, especially when margins are tight or price exposure is high.
Price fixation is another widely used method in the gold industry. It is a contractual agreement between buyer and seller to lock in the price of gold before the transaction is settled. This approach is especially useful in bulk transactions, where both sides want to remove uncertainty.
For example, a gold supplier might agree to deliver 10 kilograms at a fixed price of $3,420 per ounce in 30 days. If the market rises to $3,500, the buyer benefits. If it drops to $3,300, the supplier gains. Either way, both sides know what to expect, which helps with cash flow, pricing, and planning.
Price fixation is not a speculative play. It is a practical solution used by professionals who want to stabilize operations and protect their margins in a market where prices can shift rapidly from one day to the next.
In early 2025, a mid-sized jewelry exporter based in Dubai’s Gold and Diamond Park secured a large order from a European retailer preparing for the summer wedding season. The order required 15 kilograms of 22-carat gold, with delivery set for six weeks later. The merchant, experienced in both local trade and international logistics, understood that the gold price had been rising steadily in recent months. Waiting too long to purchase could seriously eat into his profit margins.
Instead of taking the risk, he approached a regional gold refinery that offered price fixation agreements. After reviewing the market, he locked in a fixed price of $3,430 per ounce with the refinery, covering the full volume needed for the order. At the time, this seemed slightly high compared to the daily spot rate, but it brought peace of mind.
By the time production started three weeks later, gold had already climbed above $3,520 per ounce due to a flare-up in global geopolitical tensions and a weaker dollar. Thanks to the fixed-price agreement, the exporter was shielded from the rising cost and completed the order with his margins fully intact.
This approach didn’t boost his profits, but it protected them. In a business that runs on tight delivery timelines and upfront pricing, that made all the difference.
From mining deep underground to trading on global markets, gold passes through a complex chain of hands, systems, and risks. Each stage comes with its own challenges.
For professionals in the gold business, understanding this journey determines how you stay profitable, avoid surprises, and build long-term trust with clients and suppliers.
ZitaPlus works with traders, brokers, and businesses involved in the gold, silver, and oil markets. We help you manage market risk, protect your profits, and run your business with confidence, even in volatile conditions.
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