5 Things You Need to Know about Gold Bullion Spot Price

Gold Bullion Spot PricePrecious metals are commodities that are traded on global stock exchanges and their prices are determined twice daily by so called the Gold Fixing representing five major world gold bullion traders. The spot price of precious metals reflects their delivery values on a certain day. The sellers’ prices for precious metals bullion coins and bars are typically 5%-15% higher than the spot amounts of the metals they are made out of to reflect dealer premium and mark ups. On the contrary, buying price for bullion coins or bars will normally be lower than the actual value of the metal to once again provide room for dealers’ charges and mark ups.

Please read below to learn five important facts on this topic.

1. It is important that you understand what the gold bullion spot price is, and how it is used. For better understanding you can learn how to read gold bullion spot price chart. This is not the current market value, but rather the amount set if the trade of gold bullion is settled immediately. This amount is used as a base whenever you are selling or purchasing gold bullion, and then the markup is added for a total price.

2. There are many terms used for the gold bullion spot price. One of the most common is the cash price, and it is not the same as the amount set in a futures contract. With futures the value is determined now but delivery occurs later. With the use of spot price of gold both the value and delivery are determined now instead of at a future date.

3. The bootstrapping technique is used to determine the gold bullion spot price at any given time. The market price of gold which is currently trading on the market, combined together with the formula used, will give the spot curve. This is used to set the spot price of the gold you are buying or selling.

4. This value can involve the expectations of investors and the market, as well as the actual gold price per ounce currently. If there is an expectation that the market will increase, the spot price will probably also go up, and the same is true in reverse as well.

5. The gold bullion spot price is linked to the futures or forward gold bullion prices . When the finance charges and any dividends paid are deducted from the futures amounts, the result should be the current spot price. These change frequently because the gold bullion price today may not be the price tomorrow due to market supply and demand.