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What is Gold Spot Price?

About Gold futures and live prices

The term Gold spot price is simply the name given to the current month's future contract for the price of Gold. When referring to a live gold spot price people are actually meaning the current price of Gold futures trading on exchanges such as COMEX or NYMEX.

Gold futures contracts are made available to trade as a way of purchasing Gold at a time in the future via a contract assigned to the month. For instance you can purchase December Gold futures in July with the view that the contract will increase in value over the Autumn months and then sell the contract to remove your money from the market, hopefully with a profit.

Many people day trading follow the live Gold spot price to trade volatility within a single day on the exchange. Usually when day trading you will select the current month contract (or the "front month") as this will be the futures contract with the most volume. You will find there is not as much movement on contract which are further back than the front month. Buying and selling Gold spot prices in this way can be a risky way to invest, and also you will easily accumulate lots of commission with your broker from the many transactions needed to make a profit.

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Gold futures can also be used to hedge against positions in stocks that may be on the slide. Usually Gold is considered a safe haven when stock markets are falling and "out of favour". You can see on historical Gold charts that each time stocks go through a bear market Gold can hold up well and sometimes make huge gains. However this isn't always the case and as with any investment strategy you must have a good money management and plan of risk versus reward when hedging already losing investments.

In general the Gold spot price is the quoted "current" price of Gold, and usually reflects the latest front month futures contract on any exchange.

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