What Does Spot Gold Price Mean?

A spot gold price means current market price or it can be said that price based on the price of “futures” contracts. Futures contracts are traded on future exchanges operating in a number of countries.

These futures contracts are standardized contracts in terms of lot size, delivery period between the seller and buyer. Seller means who deliver the commodity and buyer means who receives the commodity for a price fixed in future. Futures Exchanges facilitate single point for commercial trade of all major commodities of country. The commodities may include energy sector like crude oil, natural gas. It may also include cereals like wheat, corn, and soya beans, and metals like iron, copper, lead and zinc. Also future exchanges deal in gold silver and platinum plus other precious metals.

Depending upon market futures contracts is available for each month of the year. It means a contract for delivery of June is available through out of year. Basic behind to establish future market is to allow commercial producers and consumers to establish some guaranteed prices and also guaranteed supply of the commodity which is the subject matter of contract.

Spot price of gold fluctuates depending upon demand and supply. Future contracts are used to hedge the change in gold price risk. Hedgers are those who want to minimize their risk against the price change. Other participants of market are speculator who wants to take risk means the risk which a hedger wants to avoid. By the use of future contract spot price risk can be minimized. Also by the use forward contract spot gold price can be fixed to minimize the risk of price fluctuation of gold in future.

Spot gold price can be determined on commodity exchange market. All the futures contracts are traded on the commodity exchange. You can find the spot gold price from the commodity exchange like COMEX located in New York. The COMEX (Commodity Exchange) is leading commodity exchange in the United States for metals. The process of by which spot gold prices on the COMEX is determined has been specified in the NYMEX rule book.

These markets are fully computerized and the information they provide is in real-time. Second by second information about gold spot price of the futures contract of the active month as it is trading on the exchange is easily available. On the exchange the most active nearby month is also called the spot month. If you want more about the Spot gold price it may be derived from the active month calculation. And the closing gold spot price for the day is derived from that days trading of the spot month futures contract. In New York spot gold price close is calculated as the average of the highest and lowest prices of the trades during the last two minutes of closing period which is 1:28-1:30 PM.

People have option to buy gold from dealer or from exchange. But you can see the difference in spot gold price on the exchange actual prices today for small amounts of gold coins

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