Spot price
While spot prices are specific to both time and place, in a global economy the spot price of most securities or commodities tends to be fairly uniform worldwide when accounting for exchange rates. In contrast to the spot price, a futures price is an agreed upon price for future delivery of the asset. Spot prices are most frequently referenced in relation to the price of commodity futures contracts , such as contracts for oil, wheat, or gold. This is because stocks always trade at spot. A futures contract price is commonly determined using the spot price of a commodity, expected changes in supply and demand, the risk-free rate of return for the holder of the commodity, and the costs of transportation or storage in relation to the maturity date of the contract.
Commodity Spot Prices vs. Futures Prices: What's the Difference?
By creating an account, you are agreeing to the Terms of Service and the Privacy Policy. When it comes to spot prices, such as the spot price for gold or silver, there seems to be a great deal of confusion over how the spot price is determined.
Here we will outline what spot prices are and where they come from. It is important for one to understand what the spot price actually means.
The spot price is simply the price at which a commodity could be transacted and delivered on right now. This is in contrast to futures or forward contracts. The spot price of gold refers to the price of one ounce of gold and the spot price of silver refers to the price of one ounce of silver.
Gold and silver must be of specific fineness requirements. The futures prices of a commodity are contracts that designate a price for future delivery of the commodity. Commodities such as gold, silver, crude oil, wheat, corn and coffee all have futures contracts listed on them through various exchanges. These futures contracts may provide producers, end users and others involved in the commodity with a way to potentially help mitigate price risk. Futures contracts can extend quite far into time.
For example, one could buy or sell a contract on crude oil that expires in several years. The futures contracts for gold and silver represent the futures price of one ounce of silver or gold. The spot price is determined by the front month futures contract with the most volume. Sometimes this contract may be the current month, and sometimes it may be two months or more out in time. Now, if one were to look at the futures contract chain for gold, one will see that the August gold futures contract is trading at the same price.
The August gold contract is the nearest month gold contract. One can also look at the October contract which is currently trading at about the same price, as well.
October has a lot more volume than the August contract, because the August gold futures contract is expiring and those not wanting to take or make delivery have already rolled their positions out. The December gold futures contract has the most volume, and therefore would likely determine the spot price. This is because December is where the action is and the trading is taking place. Market participants are using the December contract for their purposes whether it be hedging or speculating.
The price of gold, silver and other commodities are affected by numerous things. Gold prices, for example, go through periods of little movement and go through periods of a lot of movement and great volatility. Spot gold prices can potentially be affected by such things as economic data, geopolitical news or events, Federal Reserve action or comments and many other potential drivers. The laws of supply and demand for gold, silver or other commodities may be seen in world markets. The gold market is in a constant state of price discovery.
In fact, all commodities could be said to be in a constant state of price discovery. This price discovery occurs virtually around the clock. Gold and precious metals are traded on exchanges all over the world. When it comes to spot prices, the important thing to remember is that spot is simply referring to the price at which one could transact and take delivery on now as opposed to some date in the future.
Our up-to-the-minute spot prices are provided by a variety of reliable sources. For more information on precious metal spot prices and charts, please see our Silver Prices , Gold Prices , and Platinum Prices pages. Subscribe to the JM Bullion newsletter to receive timely market updates and information on product sales and giveaways. Edit Cart. Create an Account. Already Have An Account? Log In. Remember Me Forgot Password?
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The spot price of a commodity is the local cash price for immediate delivery of the commodity. The futures price locks in the cost of a future. Live Spot Prices for Gold, Silver, Platinum, Palladium and Rhodium in ounces, grams, kilos and tolas in all major currencies.
To save this word, you'll need to log in. Log In Definition of spot price : the price of spot goods — contrasted with future price Love words? Start your free trial today and get unlimited access to America's largest dictionary, with: More than , words that aren't in our free dictionary Expanded definitions, etymologies, and usage notes Advanced search features Ad free! Join Our Free Trial Now! Learn More about spot price Share spot price Post the Definition of spot price to Facebook Share the Definition of spot price on Twitter Dictionary Entries near spot price spot-on spot pass spot plate spot price spot rot spotrump spot sheet.
By creating an account, you are agreeing to the Terms of Service and the Privacy Policy. When it comes to spot prices, such as the spot price for gold or silver, there seems to be a great deal of confusion over how the spot price is determined.
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What Is a Spot Price?
Platinum was once the most expensive of the precious metals traded, maxing out at 1, US dollars per troy ounce. That is no longer the case as it has been surpassed by gold. Platinum is both malleable and ductile and can be extracted from ore that contains platinum group elements PGM. These elements include iridium, osmium, palladium, platinum, rhodium, and ruthenium. Platinum can also be extracted from sperrylite and cooperate ores. Because of its high boiling point, and its resistance to water, air and many acids, platinum is used primarily to manufacture automotive catalytic converters, in the chemical and electrical industry and in petroleum refineries.
BullionVault's Gold Price Chart
Commodity spot prices and futures prices are each quotes for a contract, but the agreement between the buyer and the seller differs:. In commodity spot prices, payment is required immediately, as is delivery. Hence, the deal is done "on the spot. A commodity's spot price is the price at which the commodity could be traded at the time in the marketplace. Broadly speaking, futures prices and spot prices are different numbers because the market is always forward-looking. A commodity's futures price is based on its current spot price plus the cost of carry during the interim before delivery. Cost of carry refers to the price of storage of the commodity, which includes interest and insurance as well as other incidental expenses. The spot price is for payment and delivery "on the spot. Commodity futures prices can be calculated as follows: Add storage costs to the spot price of the commodity.
File created at on Sun May 10
Spot gold gained by 0. Read on.
Gold And Silver Prices, News and Quotes
Investing in commodities is different from the stock, bond, mutual fund, and ETF investing that most investors do. Because commodities involve physical goods trading hands, it's important to understand the logistics involved in making investment decisions. In particular, the difference between the spot price of a commodity and the price of futures contracts covering the same commodity plays a major role in defining how a particular commodity market behaves. Let's take a closer look at what a spot price is and why it's important in the commodity futures markets. Understanding the spot price The commodities markets are more complicated than many people realize, but the concept of the spot price is one of the simplest to understand in the industry. Put simply, if you want to buy a commodity on the spot -- rather than waiting until some point in the future -- then the spot price is what you'll pay right now to obtain that commodity. As you can imagine, spot prices change all the time. They react to changes in supply and demand of the commodity in question, rising when supply constraints cut the available amount of a good or when customers want more of that good, and falling when available supplies soar or demand disappears. Why spot prices are important Looking at the interplay between commodities markets and futures contracts highlights the importance of the spot price. Many producers of goods sell futures contracts in order to lock in prices for future production, and many purchasers of goods buy futures contracts to have a predictable cost structure for the commodities that they'll need. Yet because it's typically impossible to predict with certainty exactly how much of a commodity you'll have to buy or sell, the spot market makes it possible for buyers and sellers to meet unanticipated needs or deal with unexpected surpluses beyond what they expected to have.
FastMarkets
In finance , a spot contract , spot transaction , or simply spot , is a contract of buying or selling a commodity , security or currency for immediate settlement payment and delivery on the spot date , which is normally two business days after the trade date. The settlement price or rate is called spot price or spot rate. A spot contract is in contrast with a forward contract or futures contract where contract terms are agreed now but delivery and payment will occur at a future date. Depending on the item being traded, spot prices can indicate market expectations of future price movements in different ways. For a security or non-perishable commodity e.
