The spot gold price refers to the price of gold for immediate delivery. Known as an XAU= on Bloomberg Dealing terminal, and XAU-USD as Gold-US Dollar Exchange Rate on Bloomberg terminal.
Transactions for bullion coins, bars and refined Gold are almost always priced using the spot price as a basis.
The spot gold market is trading very close to 23 hours a day as there is almost always a location somewhere in the world that is actively taking orders for gold transactions. Such as Tokyo, Hong Kong, Sydney, London, Zurich, and New York are where most of the trading activity takes place. Whenever bullion dealers in any of these cities are active we indicate this to our clients “Spot Market is Open”.
Spot Gold vs Gold Futures
There is usually a difference between the spot price of gold and the future price.
The future price, which we also display to our clients on Bloomberg Dealing Code ‘RICG’ (RIC GLOBAL) or over the phone, is used for futures contracts and represents the price to be paid on the date of a delivery of gold in the future ‘T+3 or T+6″.
In normal markets the futures price for gold is higher than the spot. The difference is determined by the number of days to the delivery contract date , prevailing interest rates, and the strength of the market demand for immediate physical delivery.
The difference between the spot price and the future price, when expressed as an annual percentage rate is know as the “forward rate”.
London Gold Fixing
The London gold fixing is a clearly posted quoted price for gold that occurs twice a day.
The objective in establishing this was to allow large quantities of gold to bought and sold using a single price.
Because the price cannot be disputed, some of the industry participants such as the mines, refiners, fabricators, and banks use it as a basis for daily transactions. London Gold Fixing.
Change (Change from previous close)
This is the change in the price of the metal from the previous close, which is not necessarily the previous day.
Weekdays from 6:00 PM NY time until midnight the previous close is from the current day.
Here’s why: The time the gold market stops trading in New York on weekdays is for a 45 min period, from 5:15 PM New York time until 6:00 PM.
We use the last quote at 5:15 PM as the close of that given day. Change is always the difference between the current price and the price at 5:15pm.
For example: Gold last traded at $1300 at 5:15 PM on January 20th. If it is January 20th at 6:30 PM and the price is $1302 , we will show a change of +2.00. If it is January 21st at 5:13 PM and gold is quoted at $1325 then we would show a change of +25.00 at that time.
30 Day Chg (30 day change)
This is the change in the price of the metal from 30 days ago as opposed to from the previous close.
1 Year Chg (1 year change)
This is the change in the price of the metal from a year ago to day, as opposed to from the previous close.
Gold Lease Rates*
The lease rate is the cost of borrowing gold.
In much the same way that individuals borrow dollars, pay an interest charge, and then return dollars to the lendor, gold bullion participants will borrow ozs of gold, pay a borrowing cost, and return the ozs of gold to the lendor. The debt is measured in terms of ozs as opposed to dollars. The value of the metal when it is being borrowed or returned is not a factor.
The central banks & financial firms are the main lendors of gold and the borrowers are the larger industry participants. The lending and borrowing of gold is pretty much reserved for bullion bankers, mining companies, and jewelry manufacturers.
There are two factors that determine the going lease rate which is determined by market forces alone. One is the difference in demand between gold for immediate physical delivery (spot) and gold contracts for later delivery ( futures ) . The other being the current interest rates for borrowing $US dollars.
High lease rates will encourage stockpilers of the metal to sell into the spot market even when they wish to maintain their inventory levels. Being guaranteed to buy the same metals back for a lower cost at a future date offers them every possible financial advantage. For this reason exceptionally high lease rates cause the demand for immediate delivery to be satisfied.