The value of spot gold changes daily, depending on the market. In general, spot interest rates on gold are cheaper than gold futures rates, since there is no need to extrapolate when buying gold in spot. What they see is what they get, without market predictions. When you trade in the spot gold markets, the price you see is known as the Gold Spot Price and reflects the asset's current market value. Unlike futures contracts, spot gold markets are decentralized and are traded 24 hours a day, while futures trading has specific opening and closing times.
The spot price of gold represents the current purchase price of one troy ounce of the precious metal for immediate delivery. The spot price of gold is commonly used in gold bullion transactions, and trading activity takes place in numerous financial centers around the world, from Hong Kong to New York, London and Delhi. . Gold futures means trading gold and payment is made on a certain date of the present for delivery on a certain future date.
The exchange rate of gold in futures is usually higher than the price of spot gold, since it involves the risk of theft and inflation until the commodity is delivered to the buyer. The time elapsed since the delivery is requested. One of the main factors that differentiate gold futures from the spot gold markets is the fact that one-day positions can only be held until the last trading day of the gold futures contract, which is normally the third last business day of the contract month. The manufacture of ornaments and also investment in gold have continued to increase, despite the dramatic increase in its prices.
The spot price of gold is determined by off-exchange (OTC) trading, in which traders usually work individually to carry out independent operations. This is a riskier commercial proposition, as there is no certainty whether the price of gold at the time of delivery will be lower or higher than the price of gold in futures. Starting from the basics, which is the minimum lot size for trading, the position of the spot gold markets can be opened with 10,000 units or 0.10 lots. Investors who are new to gold trading usually assume that the spot price is the only way the prices of the yellow metal are fixed.
The spot price of a troy ounce of gold is determined by OTC transactions, in which prices are negotiated between the buyer and the seller. With the exception of a few minor differences in prices, gold futures and spot gold markets are completely the same. In a state of constant change, the price of live gold is driven by demand for safe haven assets and speculation in the gold futures markets. Spot gold trading and gold futures trading are fundamentally different ways of investing in the yellow metal.
Nowadays, gold can be traded in physical form, such as gold ingots, coins and ingots, as well as through paper transactions, such as gold futures, exchange-traded funds and gold stocks. Gold futures are public, regulated exchanges where gold is traded (in the form of contracts) for its expected value at a specific time and place in the future. So which market should you trade in? The following table provides a quick overview of the costs incurred with intraday trading and oscillating trading in gold futures and spot gold markets. Both spot gold and gold futures markets have their own advantages and disadvantages, such as the ability to see volume in the futures markets and centralized exchange, versus the OTC nature in spot markets.
The spot price of gold, the prices of gold futures and the fixed price of gold each serve a different purpose and are set in different ways. .
