Gold spot price
What is a gold spot price? This is a question that many new to the gold trading world ask themselves, it sounds quite difficult to understand but to be honest it is a very easy to understand concept that is important and integral to gold trading.
Today you will find out the answer to the question “what is a gold spot price?” and after you have found the answer you will feel that you have the information you need to start your own tentative steps into the gold trading world.
What is a gold spot price?
In a nutshell a gold spot price is the price you would pay for gold on the spot for any purchase of gold made that was for immediate delivery.
This may sound odd to you but it is the standard practise for any commodity purchase and has been for many years.
There are reasons as to why there is a special name for a price paid for gold and why it is important to note that you have a certain price at a certain time that needs to be paid for immediate delivery of purchased gold. In essence this is why you are reading this article to find out more information on what is a gold spot price.
Why is there a gold spot price?
As with all commodities the price of gold fluctuates constantly, this is not from day to day, not even hour to hours, it can fluctuate from minute to minute and second to second.
Because of the constant fluctuations there needs to be a set price so when someone enters a negotiation in to buying or selling gold they can use the market gold price at that moment to mutually agree the contract.
This price ended up being called a gold spot price. The need for it is for all businesses and individuals to have a universal price to use when trading in gold commodities.
How does the gold spot price work?
Well it depends on which avenue the gold vendor and buyer is taking as effectively there are two ways of a gold spot price being delivered.
The first is the Comex gold spot price as shown below:
The gold spot price is worked out by looking at future contracts on gold bars of 100 troy ounces. To do this the midpoint of a future month is looked at and the number of contracts received / to deliver at that time. One contract is the equivalent to one 100 troy ounces gold bar.
The future month chosen is always the most active month. This means it’s the month where the most contracts are trading hands, thus meaning the most gold bars are being bought or sold.
The Comex gold spot price is based in New York, the United States.
The second is the London gold spot price
The London gold spot price is worked out by the London stock exchange. This is done by reviewing the gold purchases from customers between five top banks, twice in the day the stock market and the banks convene to talk about the purchases and set the gold spot price.
Now you will find that the price does differ between the two spot gold prices, but overall there is not much difference.
Choosing which gold spot price to use
In the United Kingdom many follow the London gold spot price because it is based on the London Stock Exchange and gives many the confidences that the price they are selling or buying at is accurate and good for both parties.
If the London gold spot price is not the chosen price then the Comex is the gold price used by many worldwide when trading in gold commodities.
Summary
In summary the gold spot price is the price you would pay on any given day for your gold if it is for immediate delivery. The name gold spot price represents the fact that this is the price you are paying on the spot for your gold purchase or sale.
So what is a gold spot price? As mentioned the gold spot price is set either by the New York Comex or London Stock Exchange spot price index. The prices do fluctuate and depend greatly on the market trading either that day or in the future.
Gold chart
Most platforms for investing in gold bullion online will offer you a live price chart including historical data to show you gold spot price trends over a customisable length of time to help you determine your investment strategy. Bullion vault offer a customisable price chart showing the gold spot price in the major currencies with lots of historical data. Click below to view a live gold spot price. Bullion vault also give you lots of market commentary to help you invest in gold bullion. Check out the link below to sign up to all of this information for free and even get a free gram of gold to trade with. This is a perfect way to learn before investing your own money.