How is golds spot price determined?
The “spot price” of gold is the amount you would pay to obtain gold right now. Somewhat paradoxically, the spot price of gold is determined by how much people are willing to pay for gold in the future.DefinitionThe spot price of gold is also known as the “cash price.” It’s the price for immediate delivery. If you want to walk away as the owner of an ounce of gold, then you pay the spot price.FuturesMost gold is bought and sold in the form of “futures contracts.” Rather than buy, say, 100 ounces of gold now, you take out a contract to buy 100 ounces at a specified price at some point in the future.PurposeFutures contracts are designed to allow buyers who need a commodity—in this case, gold—to lock in prices and guarantee that there will be an adequate supply. However, the contracts themselves are also traded much like stocks, as buyers and sellers bet that the price of gold will go up or down.ContractsYou can purchase contracts that mature, or come due, in any month of the year, and
