How is the gold per ounce price determined?
Gold is a leading globally bartered asset that is traded on numerous futures markets. The most renowned and recognized exchanges include the New York Mercantile Exchange, the Chicago Mercantile Exchange, the Hong Kong Mercantile Exchange, Zurich, and London. COMEX is the essential business sector for exchanging metals, such as gold, silver, copper, and platinum. Once known as the Commodity Exchange Inc., COMEX converged with the New York Mercantile Exchange in the early 1900s and was designated as the primary division responsible for the precious metal exchange, including but not limited to the designation of the spot price of gold.
When determining the spot price of gold, it is important to note that the calculation is based on the front-month futures contract which is traded on the COMEX. The term “front-month” is utilized in futures trading in reference to the contract month with an expiration date nearest to the present date, which is usually around the same time.
Approximately 31.1035 grams of 24 karat pure gold makes up a troy ounce, while a kilogram consists of 32.15 troy ounces. The gold spot price per ounce is influenced by various factors, including these major ones:
- Current events: In times of geopolitical or economic uncertainty, and specifically in the event of war, the price of gold tends to climb, because many people consider gold as a safe-haven for investments.
- Currency and Economic Strength: As the dollar strengthens, the price of gold tends to fall, consequently its price rises as the dollar weakens. Similarly, the price of gold tends to rise when economies struggle. In general, gold is considered more stable than fiat economies or other forms of investments, which leads to this effect.
- Buying power: When large entities buy/sell gold in bulk, the act alone can impact the gold market, due to the sheer volume of the transaction. For example, countries buying or selling gold can affect the spot price.
- Market speculation: Gold prices are highly volatile with constant fluctuations, and investors often bet on the prices of gold.
Why should I invest in Gold?
With a rich history amongst almost all cultures over the world, gold remains a highly popular investment. Although it has multiple uses, its primary function is to typically hedge against inflation and an often volatile futures market as well as a way of diversifying existing Precious Metals Investment Retirement Accounts.
Gold has been one of the most valuable precious metals and has been a symbol of wealth for centuries due to its rarity and its ability to hold its worth for a long time. Historically, it has been the most common way to pass on one’s wealth as an inheritance from one generation to the next.
Today, gold in the shape of physical bullion bars and coins is the most preferred investment. Paper certificates are also available for purchase; however, they do not garner a significant amount of attention due to the lack of physical ownership. The paper certificate is merely a statement indicating the ownership of a specific amount of gold, which is stored in a secure depository.
Gold is considered a worthy investment, with coins and bars available for purchase in various sizes, ranging from one gram to a whopping 400 ounces. At Bullion Exchanges, we carry a wide selection of gold products to suit the likes of both savvy investors and passionate collectors.
Being the most reliable commodity to invest in, gold has proven to be a perfect way to diversify your investment portfolio and an excellent safeguard against volatile currency.
Are the gold spot prices the same no matter where I live?
Yes, the price of gold in India, China, Brazil, Australia, Russia, or any other country in the world would be the same as the price of gold in the United States at any particular time. In the absence of the same gold spot price worldwide, an arbitrage-free market could not be possible.
What is the gold/silver ratio?
It is the number of ounces of silver required to buy one ounce of gold. Silver and gold price chart history and the fluctuating gold/silver ratio is often used by investors to analyze how much silver is worth in comparison to gold, to evaluate if one of the two is overpriced at any given time. This enables investors to determine whether it is a favorable time or not for either buying or selling one of these commodities.
What are bid and ask prices?
The Ask price is the lowest gold price which a dealer agrees to when selling gold to a buyer. The Bid price is the highest price which a dealer agrees to pay when buying from an investor who is selling gold in the market. In other words, if you intend to buy gold from a dealer, you will pay the ask price, but if you wish to sell your previously purchased gold to the dealer, you will pay the bid price. The difference between Bid and Ask prices is referred to as bid-ask spread, or simply, the spread.
Why can't I buy at the Gold spot price?
The gold spot price is the cost at which a product can be executed and delivered on right now. It does not consider the premium or added cost of a bullion coin well beyond the market estimation of the metal content the commodity encompasses. A manufacturer marks up the price due to the minting costs and sells it to a dealer. A dealer thereafter further marks up the gold bullion prices in order to account for distribution costs and a minimal dealer fee and sells it to individual buyers and investors. Bullion Exchanges offers gold in various forms of investment with free shipping at the lowest possible markup from the spot price.
What is the difference between an ounce and a troy ounce when looking at a price of gold chart?
An ounce is equivalent to about 28.349 grams and is used as a measure for almost all common commodities whereas, gold is always measured by the troy ounce which weighs about 31.103 grams. This standard of measurement was adopted by the United States for standard coinage in 1828, but it was created in France during medieval times.
Why does the price of gold change so often?
The gold rate is influenced by current events, market speculation, currency values, supply and demand, and buying power. Wherever one or more of these fluctuate, the price of gold changes, though in general, it has historically been quite stable.