A Guide To Understanding How Gold Prices Are Determined

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Gold, which has always been the very foundation of global wealth, is a commodity that investors turn to when the economy looks vulnerable and when you look at the yellow metal’s performance in 2020, you will see a rise of 24%, which is a great return. You might be wondering what exactly determines the spot price of gold. In this article, we offer an explanation to help you gain a deeper understanding of how the global gold bullion markets work.

Who Sets Gold Prices?

There is one governing body that decides on the gold spot price, namely the London Bullion Market Association (LBMA), who announce prices at 10:30 am and 3:30pm GMT, which the rest of the world uses for all transactions. London has long been the centre of the gold bullion industry and while years ago, the spot price would be fixed over a telephone call, electronic means is now used. The amount of newly discovered gold bullion released into the market is carefully controlled, so as not to flood the global marketplace, while the industry is also regulated.

Gold Spot Price

The spot price of gold changes almost by the minute. If, for example, you wanted to check Adelaide gold dealers for their latest bullion prices, a Google search will take you to the website of a leading dealer in the area. They will post the current spot price on their platform around the clock. When buying gold, you should always take physical possession of the precious metal; simply make an online appointment with the gold bullion dealer and pay their offices a visit. The same goes when selling gold, as the bullion dealer would offer the best buy-back prices and they will pay you in the currency of your choosing.

Gold Bullion Coins or Bars

When you invest in gold, you can choose between gold coins that weight exactly one troy ounce, such as the American Eagle and the American Buffalo, or you could take delivery of your gold in bars or ingots.

Gold Futures Price

The futures price for gold involves the contract for delivering a specific amount of gold at some point in the future and this system does not involve the physical transportation of the gold, rather it is done electronically. If, for example, you think that the spot price for gold will be higher, then you can buy a contract and should the spot price has gone up, then you would make a profit on the transaction when the contract expires. The biggest gold futures trading exchange is COMEX, which also trades other precious metals and if you are planning to play the gold futures market, you need to do a lot of research, while remembering that there are risks with all forms of trading.

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Now is the right time to move your wealth from stocks and shares to investing in gold bullion, which rose in value by 24% in 2020 and the signs are that gold will continue to rise in price, as more and more investors put their wealth into this shiny, yellow metal that we find so alluring.