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Spot Gold Prices and All About It

All about Spot Gold Prices

Gold is informally described as “commodity money” because it acts as a mixture of both commodity and money. It is traded in the spot market independent of a single central bank or government. Therefore, this precious metal is a hedge against inflation and financial turmoil. Spot gold prices are simply defined as the current gold prices. To know more about it, a brief outline of spot gold prices, its factors, benefits, history, usage and much more has been discussed down below.

What is Spot Gold price?

Spot gold price, as mentioned, before is the price at which gold is bought or sold in that specific time distinguished to the price on a date in the future, i.e., the current price rather than the predicted future price. It can be mentioned as the current price of gold per ounce, kilogram(s) or gram(s). Normally, it is noticed that spot gold prices are in the denomination of price per ounce using U.S. dollars. Simultaneously, there are quotes showcasing the spot price in other currencies. It is to be understood that the spot gold prices are not consistent and are driven by multiple factors that keep them in a state of constant flux on a frequent basis.

The main advantage of spot gold price chart is the ability to identify trends in the gold market, and assess the various factors of support and restriction to purchase or sell. They can be viewed on the basis of different timeframes as per ones goals. The timeframes can be from every-few-minute, hourly, or daily updates to weekly, monthly, or yearly chart updates. This distinction comes with the investor’s objectives with the investment made.

Gold spot prices are determined by traders on the basis of future exchanges. The quote required for immediate settlement at any instance is the gold spot price. These quoted prices might not always be accurate due to various external factors. In case of extreme stress, the spot price quoted before for the precious metal would not be the actual pricing because of the same.

What Determines the Spot Gold Prices?

Spot gold prices are a subject to constant fluctuations based on multiple different factors such as supply and demand, speculations in the market, currency values, geo-political factors, mine supplies, current events, equity market, interest rate, inflation and deflation, and other such factors. These factors influence the gold spot price, based on which most bullion dealers determine the exact price to charge for specific gold bullions.

Supply and demand

The more the demand for gold by investors, the higher the prices by the seller. This in turn might lead to more bidding. At the same time, if the buyers become overwhelmed by the prices set by the sellers, they might bid lower resulting in lower prices.

Currency Value

When there is an increase in printing of currencies, it tends to drive the gold prices up. This is because, the more the currency units being chased, the higher would be the number of gold ounces/ grams/ kilograms that are pledged. However, in comparison to price of other assets gold price performs poorly if the government policies stresses on responsible living and within the means attitude. The currencies’ value thereby influences the spot gold price.

Geo-political conflicts

Geo-political conflicts affect countries that import the precious metal highly which is a majority of the countries across the world. In addition to conflicts, mining of the precious metal and its quantity also determines the spot price of gold.

Current events

The current events help determine the prices because a considerable quantity of this precious metal is bought and sold across many different countries, and cities in the world. Therefore, on any given day, these exchanges affect the price of gold, furthermore the spot price. Hence, it helps determining the spot gold price.

It is in the best interest of the investor to be in track of all changes in the factors that influence or determine these spot gold prices to have a better planned and calculated outcome than otherwise.

Factors that Drive the Spot Gold Prices

The essential factors that drive the spot price are same as the influencers that determine gold spot prices. Gold investments have different usages in different industries. Gold is commonly used in the jewellery industry. Apart from that, it is used in the medical industry, electrical industry etc. Here are some important factors that are directly or indirectly proportional to the fluctuating spot gold prices.

  • Spot gold price during economic stress

It is seen that gold investments during economic or geopolitical stress are potentially of stronger demand. This is because gold purchase may potentially increase from a collapsed stock market or bear market.

  • Interest rate for spot gold price

Interest rate has a significant effect on spot gold price. This is because there is a potential benefit in situations of extremely low interest rates. Low interest rates make way for the opportunity cost of holding less amount of gold. On the contrary, gold becomes pressurized when the interest rates rise. High interest rates are a challenge because of the fact that gold has no dividend or interest for holding it.

  • Rate of dollar

Gold is traded all over the world, but is most commonly dominated by dollar rate. This affects the gold spot price in two ways. When the dollar price rises, it makes gold comparatively more expensive for other foreign buyers. This affects the spot price by portraying a decline. The second way is when the dollar price weakens and leads to comparatively inexpensive gold price, a rise in spot price of gold is seen.

These were some important driving factors of spot gold price. Let us now look at the benefits of spot gold price.

Benefits of spot gold prices

Spot gold prices have the best of interests for both investors and sellers.

  • Spot gold price for investors

Being well informed of the spot price of gold helps an investor make better gold investment decisions. In such a case, an investor has a higher chance of better return from the investment made. It also helps determine the right time for investment and the right price trend.

  • Spot gold price for sellers

Spot price of gold for the sellers helps determine a competent price for the same. It in turn attracts more investors. A successful seller knows how to utilize spot price of gold for their timely benefit as need be, irrespective of profit or loss. If the spot price is high, they could consider lowering the selling price and vice versa.

Gold has had a long standing history with investment value in the Indian market. Here’s a list specifying the gold price trend has been specified.

Historical gold prices in India from 2000- 2019 (September 16th)

The YearThe price of a 24k pure gold of 10 gramsThe Year The price of a 24k pure gold of 10 grams
20002011Rs. 26,400.00
2001Rs. 4,300.002012Rs. 31,050.00
2002Rs. 4,990.002013Rs. 29,600.00
2003Rs. 5,600.002014Rs. 28,006.50
20042015Rs. 26,343.50
2005Rs. 5,850.002016Rs. 28,623.50
2006Rs. 7,000.002017Rs. 29,667.50
2007Rs. 10,800.002018Rs. 31,438.00
2008Rs. 12,500.002019Rs. 37,970.00
2009Rs. 14,500.00
2010Rs. 18,500.00

As discussed above, there are two types to the price of gold- the spot and the future price of gold. Here are the differences between them.

What is the difference between Spot Gold Price and Future gold market price?

Gold spot price defined before is the current price at which the gold is traded on that spot. It is used for immediate action, wherein the product and the payable sum are both instantly interchanged. The prices are current and do not depend on the storage, delivery prices etc.

Future gold is a trade where the transactions are executed on a fixed date, but the product is delivered in the future, as initially decided upon. Basically, one pays for the product (gold), but is only able to obtain the delivery in the future. They account for the delivery charges, storage prices and other similar parameters as this makes future cost more expensive.

Major differences between Spot gold price and future gold price:

  • Delivery of the product

SGP (Spot Gold Price): Instantaneous (especially compared to future golds)

FGP (Future Gold Price): On an agreed date (could range from 2-3 months) Price of the gold

Spot Gold Price: Based on the current prices Future Gold Price: Prices alter based on storage prices, delivery charges. Complete price’s settlement

Spot Gold Price: It calls for instant settlements and that to at the point of trade. Future Gold Price: It can be done within a day or two of signing the contract. Liquidity of the gold obtained

Spot Gold Price: Gold from this category has high liquidity. Future Gold Price: The liquidity of gold obtained is limited, because of the time taken to deliver the gold. Level of risk

Spot Gold Price: The risk factor with spot gold price is comparatively very low. Future Gold Price: It has a higher risk than spot gold price, but has a moderate risk level in general. It is again affected by the delivery time as the price is directly affected with the market standards, which keeps fluctuating.

What is Gold Rate MCX Market?

MCX stands for Multi Commodity Exchange of India Limited. It is an independent company for commodities exchange and deals with trading of 40 commodities. The commodities include bullions, precious metals, plantations etc.

The Multi Commodity Exchange of India Limited provides a platform for commodities trade, much like Bombay Stock Exchange’s stock trading at a certain price. Contrary to the popular assumption, the price of gold sold in MCX market is not determined by MCX. They depend on international price, USD to INR conversion rates, quoted unit of gold or silver.

Price of gold at MCX can be determined using an easy formula- Gold price can be calculated for 10 grams by multiplying the International Gold Price with the U.S. dollar to Indian rupees conversion rate, and further multiply it with 10. The quoted unit price of gold exchange at MCX is of 10 grams.

To learn about the quoted prices and international prices etc. one can take utilize gold rate news.

What is Gold Rate News?

Gold rate news, as one can simply assume, is the collected data about rates of gold that is broadcasted on a regular basis. This news helps keep track of various aspects of gold market price, investment value, data analysis, gold spot price etc.

Keeping track of the gold rate news is a must for serious investors as it helps develop an understanding of the various patterns to help make well-informed investment decisions. The most recent development with the gold rate news is gold price increase of 1% in future trades as of September 16th. MCX gold traded the yellow metal at Rs. 37,970 per 10 grams. This occurred due to geo-political issues in Saudi Arabia.

Fluctuations in gold prices, demand and supply in the market are better understood through gold rate news, because it comprises a comprehensive set of necessary and valid information regarding this market.

Conclusion

Any investment made is done with an objective of making a profit. And it is well known that investments bring with them uncertainties and risks of various kinds personalized to each type of investment made. Needless to say, a successful investor makes sure to go through all the necessary factors that influence their investments in any way possible. This is done on a regular basis with the ever changing markets and can be within the timeframe of a few minutes, weeks, months, or a year.

Investments can be made on the basis of the spot price of gold or the future price. Spot price is considerably more beneficial. All necessary elements to consider while making gold investments on the basis of spot prices have been dealt with in this article, make sure to go through them and make well-informed decisions for better investments.

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