How Much is Gold Worth - Who Sets the Price of Gold

How Much is Gold Worth - Who Sets the Price of Gold

How Much Is Gold Worth

For private investors, the spot price of gold effectively determines how much gold is worth. The spot price is the price at which gold is traded at a particular point in time and location for immediate delivery.

The immediate price of gold is derived from the price of the futures contract in the most active month' which tends to be the closest futures month. Futures contract months are February, April, June, August, October and December.

The most important bullion exchanges in which the spot price is determined are the LBMA in London and the COMEX in New York between which on any given day, most of the gold spot price action will occur during their trading hours.

Other bullion exchanges exist in major cities such as Tokyo, Hong Kong, Sydney, Singapore, Shanghai, Dubai and Zurich. Given this global reach, a gold spot price is continually being established even when the COMEX and LBMA are closed, allowing gold to be traded 23 and half hours every day excluding weekends.

LBMA

The LBMA which stands for London Bullion Market Association' operates between the hours of 07.30 GMT and 15.00 GMT. It used to be the foremost bullion exchange in the industry but during the crisis of 1968 in the run up to the end of the gold standard', its importance waned. Nevertheless, it is still a leading exchange whose Good Delivery' list is widely accepted as the de facto standard for the quality of gold and silver bars.

In a somewhat archaic and typically British ceremony, the core members of the LBMA still meet twice a dayto fix' the price of gold wherebythe official price of goldto beused by producers, consumers and central banks is determined.

COMEX

The Commodities Exchange (COMEX) of New York is open between 08.30 NY Time and 13.30 NY Time. In 1994 it was absorbed into the New York Mercantile Exchange (NYMEX) and the process of determining the gold spot price is now based upon the NYMEX Rule Book'.

The combined trading hours of these two exchanges results in the gold spot price today generally seeing the most price action between the hours of 07.30GMT/ 03.30 New York Time and 17.30GMT/ 13.30 New York Time.

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