Trading Globex Gold

Lessons from the Darkside · Lesson 10

Gold does not care that it is midnight in New York. Half the people who actually use the stuff are awake, and the chart shows it. It is also the contract that taught me what “size is a decision” means, one dollar at a time.

Most of my trading is ES and NQ, but gold is the one other market I return to at night, and it behaves differently enough to deserve its own lesson. Gold is a global market whose physical buyers live in Asia and whose price is fixed in London. The night is not its off-hours. In some ways the night is its home.

Why gold suits the night session

• The participants are awake. Asian physical demand, Chinese and Indian buyers, Asian central banks and the Shanghai gold market all trade during the Globex session.
• The London fixes. The LBMA sets its morning price around 10:30 am London time, which is 5:30 am Eastern. Gold often builds toward it through the European morning.
• It trends overnight. Where the index futures tend to range in Asia, gold more often picks a direction after the Tokyo open and carries it. That changes the setup mix.

What moves it after dark

• The US dollar and Treasury yields. Gold is priced in dollars; a move in the dollar index at night moves gold mechanically.
• Asian currency moves, especially the yen and yuan.
• Geopolitical headlines, which arrive at any hour and hit gold first.
• Central bank buying and physical demand news out of China and India.

How the setups change

• Same levels, different weight. Prior session high and low, settlement, the overnight VWAP and round numbers all apply. In gold the round numbers matter more than in the indices; the market is full of people watching them.
• Acceptance works better. Because gold trends overnight more often, acceptance beyond the Asian range on volume is a higher-quality trade in gold than in ES.
• Fades need more patience. A gold wick into a level can keep going for a long time before it turns. Stops behind structure, not behind the wick.

Size and tick math

Gold moves in ten-cent ticks worth ten dollars each, so a single dollar of movement is a hundred dollars per contract and a normal overnight swing is many dollars. Most night traders are better served by the micro contract (MGC, ten ounces) until the behaviour is familiar. I trade GC small and only when the indices are quiet or gold is the story of the night.

Where gold and the indices meet

Watching gold alongside ES at night tells you something about the night’s mood. Gold bid while the indices sell is a risk-off night; gold and indices rising together usually means the dollar is falling. It costs nothing to have the chart open and it has saved me from more than one wrong read.

Lesson 11 is about the part of this that keeps you in the game: risk after dark.

Questions people ask

Is gold good to trade overnight?

Gold is one of the few futures markets whose natural participants are awake during the Globex session: Asian physical buyers, Asian central banks, and the London market whose morning fix lands at 5:30 am Eastern. It trends overnight more often than the index futures.

What time does gold futures trade?

GC trades on Globex from 6:00 pm to 5:00 pm Eastern, Sunday night through Friday, with a daily halt from 5:00 to 6:00 pm Eastern.

Should a beginner trade GC or MGC at night?

MGC, the micro contract, until the behaviour is familiar. A one-dollar move in gold is one hundred dollars per GC contract and ten dollars per MGC, and overnight swings in gold are often many dollars.

Next lesson: Risk After Dark.

Photo: Jingming Pan on Unsplash.