What is the gold price?

Since before history books were even written, gold has been seen as the universal symbol of prosperity and has shaped the world's economy. In ancient times, gold opened up new pathways of trade and the transportation of goods between civilizations. In more modern times, gold is still used as a valuable investment tool and is still frequently traded because it is regarded as a safe asset whose value doesn’t depend on the backing or guarantee of anyone bank, government, or other governing body. But what does that mean in real terms? And what is the gold price - why should the price of 24ct gold mean something, and how can you benefit from fluctuations in the gold price?

Before we can explore those questions, we will need some history on this iconic status symbol.

History Of Gold

For millennia, one of man's most precious resources has been gold. In fact, many cultures over the ages even assigned heavenly qualities to it, believing that it was connected to their gods. Thanks to its unique properties, gold is extremely challenging to work with and make use of in its rough nugget nature. Despite this, it was first smelted and used as a material by humans over 5,600 years ago. This yellow metal was most likely first mastered by the Egyptians, who turned it into a representation of wealth and also of royal and religious power. Even so, the first gold coins did not exist until around 600 BC. Originally made up of a blend of a variety of metals, these coins eventually evolved into pure gold pieces.

This metal's new role as a convenient method of trading signalled the start of a new age, and gold soon became the foundation for a large number of global currencies. Gold was easy to trade because no matter where you were when looking at selling 100g of gold, price differences would be negligible compared to other goods. Cultures eventually moved away from barter systems and opted for currencies based mostly on gold, which gave gold areal-world value.

What Is the Gold Price?

The gold price can mean different things to traders. It can refer to the spot price of gold, the futures price, or the gold fix price.

The spot price of gold is the easiest to understand as it is the current market price of gold per ounce and refers strictly to the actual value of the commodity. This price is directly tied to the value of gold, so it fluctuates throughout any given trading day.

Gold futures, on the other hand, refer to contracts by lenders that state they will buy gold in the future. These contracts indicate the buyer's willingness to buy and pay for the gold at a set price, but the transaction happens later. The transaction can be seen as an informed bet as to where the market value of gold will be on that date. This price is influenced by various factors, including shipping and storage costs as well as the spot price of gold bullion.

Finally, you have the gold fix price, which is also referred to as the LBMA Gold Price, which is the global benchmark price for gold.

How Is the Gold Fix Price Determined?

The gold fix price is set by the London BullionMarket Association (LBMA): The Independent Precious Metals Authority twice a day through an electronic auction, which is independently operated.This is administered by the ICE Benchmark Administration. The final prices of gold and silver at the end of the auction are published as the official prices in US Dollars, but the commodities' values are the same worldwide. So, if you were looking for the price of gold in UK per tola, for example, you would need to use the US Dollar price to calculate it.

How To Use the Gold Price to Make Money?

While trading on the spot price of gold may be able to net you a tidy profit, trading on gold futures is the more popular choice. The main benefit of wading through the futures market is the potential to purchase a large number of gold futures for a fairly low investment. You could quickly make a large sum of money if gold futures shift in the direction that you predict.

Another excellent alternative to owning actual gold is to purchase an exchange-traded fund (ETF) that monitors the value of gold. TheseETFs aim to bring you the profit of gold minus the yearly expense of the ETF.Gold ETFs are more fluid than real gold because you can sell them anytime the market is open, for the going market rate. As an example, let’s look at an amount equal to 10g of gold price, UK gold prices fluctuate twice daily, so you could potentially earn on the fluctuation of the gold price twice during a single trading day.This means that the gold price is fairly fluid, even though it doesn’t fluctuate as much as other assets.

So, Is Gold A Good Investment?

Smart investors don’t put all their eggs into one basket, they distribute their money across multiple stocks, EFTs, shares, and commodities such as gold and silver. Gold is of particular interest to investors because the gold price tends to rise when the cost of living increases, unlike stocks and shares, so it is known as a hedge against inflation. It is also known as a safe haven or crisis commodity, as it is one of the few commodities that can retain its value during political or economic turbulence. This is because, during times of crisis, it frequently outperforms other investments, and its price tends to rise the most when people’s confidence in their government is low.

Gold is an undoubtedly valuable asset that is often praised for its ability to hold its value, regardless of the state of the global economy. Whether it is being smelted down for jewellery, used to make microprocessors for new technology, or traded as gold bars, gold has an undeniable impact on the world and there is little doubt that it will remain a vital currency for eons to come.

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