Apr 2012


Apr 2012

Gold Spot Price

By StoneX Bullion

Gold Spot Price Formation

The gold spot price is of interest for the traders and investors acting on the spot market. Therefore, it is in fact the price for the spot gold. As all the prices for all the commodities listed on the market, the gold spot price is also determined by supply and demand. The way these indicators influence the evolution of gold is a simple and basic one.

If on the market the supply of gold is higher than the demand then it is a natural consequence for the gold spot price to decrease. It means that more traders are looking to sell gold than the ones looking to buy this precious metal. The other situation is that demand is higher than supply and so the price will increase. It means that the market has a bigger proportion of buyers than of sellers.

Besides the action of these fundamental economic indicators, the gold spot price is also fixed in London when five representatives from trading companies participate in a meeting daily. It is a priced fixed twice daily and it is also known as London Gold Fixating.

Gold Spot Price Advantages

One major way from benefiting from this price and its volatility is in the following situation: when two bullion traders are involved in closing a transaction, one of them will quote the gold spot price. It means that the buyer will pay to the seller at that particular quoted price in a period of maximum 48 hours.

So if a trader suspects that the price will increase in the following two days he will definitely take advantage of it and close a buying transaction today. And he can sell it at the new gold spot price when it increases.

Another advantage of the spot market and of the gold spot price is that bullish traders can undergo a loan when they decide that it is time to leverage their assets found in the form of gold. The beauty of it is the possibility of taking the loan in the currency with the lowest LIBOR on the market which is the Japanese yen since 2006. This method is known under the name of yen-gold carry trade.

Furthermore, in this discussion about advantages, I want to mention that the gold spot price is also beneficial for those who are in the possession of bullion gold coins because they are valued in relation to this gold price plus a small premium. Therefore, if the spot gold price increases sellers will obtain more for their gold bullion coins. This is a situation true for the present times.

Updated Gold Spot Price

The gold spot price is available all over the Internet under the form of highly available data which can be quickly loaded. Gold is measured in troy ounces and in grams and you will find the price expressed in function of these measuring units.

The numerous sources offer everyone the possibility of being updated at any time about the gold spot price which is available in various currencies and for different periods of time. However, the main currency in which is available the spot gold price is the US dollar.

The gold spot price is a useful tool for both small and large investors and traders offering the possibility of making profitable investments.