The price of gold and silver is driven by demand and supply; investors buy these precious metals for a variety of reasons but especially to diversify their assets and to rush to quality during economic recessions or other serious crisis. Precious metals have proven their ability to preserve their worth over time when a national currency was losing value. Central banks, the IMF and other government organizations play an important part in influencing the price of gold as they hold about 19% of the world’s gold reserves. Fund managers, whole sale dealers, private investors and speculators make up the rest of the players in the market.
What is the Relationship between Spot Price and Future Price?
Futures exchanges are where the “spot” prices for the precious metals are set. For gold and silver investors, the spot price is the one most commonly used. It is the price you see on CNBC, in the newspaper. Technically “spot” refers to the price at which a futures contract for nearest active delivery month was most recently traded. It fluctuates up and down from second to second while the exchanges are open and trading – much like stock prices do.
Spot Metal Prices
Spot metal prices or commonly called “spot prices” often refer to silver and gold markets. These are closely watched by financial institutions, dealers, retail investors, and online traders all over the world. These involve the current price at which equity can be bought or sold at a specific session and place.
Spot gold is used as the most common basis for bullion dealers. It is used in determining the exact price of coins and gold bars, which varies every second during market hours. Prices are estimated in troy ounces.
Spot silver, on the other hand, is the fixed rate of silver per ounce for the trading session.