What is Gold Spot Price?
The spot price of gold is the most common standard used to gauge the going rate for a troy ounce of gold. The price is driven by speculation in the markets, currency values, current events, and many other factors. Gold spot price is used as the basis for most bullion dealers to determine the exact price to charge for a specific coin or bar. These prices are calculated in troy ounces and change every couple of seconds during market hours.
Gold Spot Price FAQs
What is the gold price quoting exactly?
When you see the price of gold posted somewhere, such as on a website or a dealer’s page, it will usually be quoted as the spot gold price per troy ounce in U.S. dollars (USD). One can, however, get the price of gold per gram or kilo, as well.
What does the “spot price” mean?
The spot price of gold — or any commodity for that matter — represents the price at which the commodity may be exchanged and delivered upon now.This is in contrast to gold or commodity futures contracts, which specify a price for the commodity for a future delivery date.
How are spot gold prices determined?
Gold is a commodity that is traded all over the world, and as such, it trades across many different exchanges, such as Chicago, New York, Zurich, Hong Kong, and London. The COMEX, formerly part of the New York Mercantile Exchange and now part of the CME Group in Chicago, is the key exchange for determining the spot gold price. The spot gold price is calculated using data from the front month futures contract traded on the COMEX. If the front month contract has little to no volume, then the next delivery month with the most volume will be utilized.
What are Bid and Ask prices?
Bid prices represent the current maximum offer to buy in the market, and Ask prices represent the current minimum offer to sell in the market. If you are a buyer, you will pay the Ask price, and if you are a seller, you will receive the Bid price. The difference between the two prices is the bid-ask spread, and the tighter the spread, the more liquid the product.
Why can’t I buy gold at the spot price or below?
The gold spot price is the prevailing price for an ounce of .999 fine gold that is deliverable right now. The spot price does not take into account dealer or distributor markups or markups by the minting or manufacturing company. Most of our inventory is purchased directly from the mint; those products are priced at the spot price plus a markup for the mint or maker to turn a profit.
The dealer then also has to make a profit in order to stay in business. The dealer will take their purchase price, then markup the products further to cover dealer costs and a profit margin. This is why dealers will typically buy from individuals at or below the spot gold price and they will sell above the spot gold price. The spread between their buy and sell prices represents the dealer’s gross profit.
So if gold is quoted at $1320 per ounce, how much gold can I get for that price?
Spot gold prices are quoted as the price of 1 troy ounce of .999 percent fine gold deliverable now. This means you can usually purchase one ounce of gold bullion for right around this price plus the dealer’s premium.
What currency is the spot gold price quoted in?
Gold is traded in U.S. dollars (USD) and is therefore quoted in USD. In areas outside of the U.S., the spot gold price is taken in USD and simply converted to local currency.
Is the price of gold the same all over the world?
The price for an ounce of gold is the same all over the globe; otherwise an arbitrage opportunity would exist. The world spot gold price is simply converted into local currencies to give market participants the price for 1 troy ounce of .999 fine gold in their respective local currency.
Gold Price Factors FAQ
The price of gold seems to move around quite a bit. What are some things that cause changes in the gold price?
Gold is a commodity that can have very rapid price changes during periods of high volatility and can also have very little price movement during quiet periods of low volatility. There are many different things that can potentially affect the price of gold. These issues include but are not limited to: supply and demand, currency fluctuations, inflation risks, geopolitical risks, and asset allocations.
Gold is viewed by some as a “safe-haven” asset for it is one of the only assets with virtually no counter-party risks (gold requires no performance by outside entities to retain its value). This is why gold’s value may potentially rise during times of economic instability or geopolitical uncertainty.
Why does gold trade essentially 24 hours per day?
Gold is traded all over the globe through all different time zones. In addition, with today’s markets running nearly around the clock, the need for constant price discovery has increased. Gold trades virtually around the clock to allow for banks, financial institutions and retail investors to access the gold market when they choose.
How often do gold prices change?
Gold spot prices change every few seconds during market hours and can fluctuate throughout the course of a day based on breaking news, supply and demand, and other macroeconomic factors. The gold spot price is determined by a variety of domestic and foreign exchanges, allowing the gold spot price to consistently update from 6PM EST to 5:15PM EST, Sunday to Friday (markets close from 5:15 PM to 6 PM EST each weekday). The changes in gold prices are due to supply/demand, as well as order flow and other factors.
Other Gold Price FAQ
If a gold coin has a face value, shouldn’t the coin be worth more money?
There are several gold bullion coins that have a face value. That is to say that they are considered good, legal tender in their respective country and could be used to make purchases just like cash. The fact is, however, that these coins are not often used to make purchases. They are worth more for their gold content than their face value.
Have you ever seen someone pay for items at the grocery store with a $20 Saint-Gaudens gold coin? Probably not. These coins, and others that carry a legal tender status, derive their value primarily from their bullion content and collectability or scarcity in the market.
If gold is priced at $1320 per ounce, why do I see gold coins selling for hundreds or even thousands of dollars over that price? Does the dealer make that much money?
Gold products, especially gold coins, are priced based on gold content and their collectability. The gold content is pretty straightforward. The collectability premium, however, is another animal. Gold coins with the same gold content may have wildly different market values based on such things as when or where they were minted, how many coins of that particular type were minted, what condition the coin is in, and more.
Just because a dealer is selling that coin for hundreds over the spot price does not necessarily mean that the dealer is making hundreds of dollars on the coin. The dealer likely paid several hundred dollars over the gold spot price for the coin, as well, and is now looking to sell it with his or her profit margin attached.
If the price of gold is constantly changing, how do I lock in a purchase price if I am buying gold?
Dealers have procedures for locking in a specific price on gold products based on current price levels. These procedures may vary from dealer to dealer. The Oxford Gold Group locks in your purchase over the phone when you make your purchase.
What is the gold/silver ratio?
The gold/silver ratio represents the price relationship between gold and silver. Some investors will analyze historical gold/silver ratios to see if the current ratio means gold or silver are under or overpriced relative to each other.
Aren’t I better off buying from a local coin shop?
Gold and silver bullion are very competitive markets these days. Online dealers may offer buyers some advantages over local coin shops. One big potential advantage is lower prices. An online dealer does not have the overhead a brick-and-mortar coin store does. Because an online dealer typically has lower overhead, they can offer products at lower premiums and still make a profit. In addition, online dealers will often have vastly larger selections than a local coin store.
Does the price of gold go up if the stock market goes down?
The price of gold often exhibits a negative correlation to stocks. That is to say that yes, gold and equities usually move in opposite directions; however there are also times gold and stocks may both move in the same direction. Many consider gold to have little correlation to stocks and bonds, and therefore feel it can potentially be a wise investment to add to one’s portfolio.
What is the gold “fixing?”
Gold fixing refers to the price set by the London Gold Fixing Company twice a weekday at 10:30 AM and 3:00 PM GMT. This price is determined by certain LBMA market makers, including representatives from Scotiabank, Deutsche Bank, and HSBC.
What is an Assay?
An assay is a certificate or encasing that guarantees the purity and authenticity of the accompanying gold piece. Assays typically include a serial number, which will match the serial number imprinted on the bar. Assays will also include a signature by the official assayer of the piece.
How many grams are in an ounce of gold?
Gold is always measured by the troy ounce, which is equivalent to about 31.103 grams. This standard of measurement was created in France during medieval times and was later adopted by the United States in 1828 for standard coinage. A troy ounce is slightly heavier than a “regular” ounce, which weighs only 28 grams.
How many ounces are in a kilogram of gold?
There are 32.151 troy ounces in one kilogram of gold.
What are the different types of gold bullion?
Gold bullion is available in the form of coins, rounds, and bars. Gold coins are different from the other two options in that they are produced only by government mints and carry a face value in their country of origin. Many countries throughout the world produce their own gold coins containing a wide range of designs and sizes. Gold bars and rounds are produced by private mints and are usually found in a wider selection of sizes than that of coins.
Can I put gold in my IRA?
Yes. You can learn more about having gold in your IRA/401k by visiting our IRA Information Page.