How the Gold and Silver Prices are determined?
You must be curious as to why precious metals have traditionally been favoured as investment vehicles.
The prices of gold and silver must be supported by some system. Similar to that, there must be some causes for their regular fluctuations.
You’ve come to the right place if you’re new to the precious metals market and want to learn more about it. The essay walks you through a number of technical facets of the trade for precious metals.
Continue reading to learn more about the factors that influence the price of gold and silver as well as other vital information about the precious metals market.
Without further ado, let’s explore the elements that affect the prices of gold and silver:
Gold and Silver Prices: Determining Factors
Gold and silver are valued “indirectly,” according to some. The fact that gold and silver are considered safe-haven investments is one important element affecting their value.
At times of economic uncertainty or geopolitical unrest, investors frequently resort to gold and silver as a means of protecting their money.
Let us take a look at significant determining factors of gold-silver prices:
- Correlation with prices of other commodities
- Central banks’ activities
- Changes in the interest rates
- Economic growth of the US and other emerging markets
- Global demand and supply
It’s time to understand the meaning, technical and trading-related aspects of precious metals:
What is the Fixing?
Fixing refers to regulating precious metals’ supply and demand in order to keep prices stable. It takes place every day. The agreement to buy and sell precious metals at a set price is made between market participants who are on the same side.
The ICE Benchmark Association oversees the London Bullion Market Association (LBMA) (IBA). On March 20, 2015, it replaced the London Gold Fix. An electronic auction hosted by the IBA is held in US dollars.
This electronic auction procedure allows for both electronic trading and physical settlement. For this auction, anonymous and combined bids and offers are displayed in real time on the screen.
The main body in charge of regulating the world’s over-the-counter (OTC) gold and silver markets, the London Bullion Market Association (LBMA), set the benchmark gold price.
Twice a day, at 10.30 AM and 3 PM UK time, the ICE Benchmark Administration sets the LBMA Gold Price (IBA). The benchmark price is established via the LBMA Gold Price Auction, an electronic auction mechanism run by the IBA.
The IBA establishes a starting price for the auction based on the current spot price of gold. After that, the beginning price is changed upward or downward until the auction reaches an equilibrium position when the number of buy and sell orders is equal, creating a market that is in balance.
The LBMA Gold Price established at the point of equilibrium is then fixed by the IBA. This price sets the bar for prices at that time of day. Globally, gold contracts and products frequently use the LBMA Gold Price (The Gold Fix) as a reference price. As a result, it serves as an essential benchmark for the world gold market.
Here are the price-setting timings for various precious metals:
Gold Fixing: 10:30 AM & 3:00 PM
Silver Fixing: 12:00 PM
Platinum and Palladium Fixing: 9:45 PM & 2:00 PM
Please note that all the timings are as per GMT.
What is the Spot Price of Gold and Silver?
The current market rates at which a metal is purchased or sold for prompt payment and delivery are known as metal spot pricing. Spot pricing for gold and silver typically refer to the cost of one ounce of each metal.
Thus, when we talk about spot gold and silver, the transaction is meant to happen “right away.” Hence, spot trading in gold and silver at current gold and silver prices is conceivable. Technicalities exist in relation to payment settlement and physical delivery.
It is essential to have access to live and historical market data for gold and silver (like XAU/USD, XAG/USD, XAU/EUR, and XAG/EUR) to analyze the market and make informed trading decisions.
Sources of Gold and Silver Prices
Reputable over-the-counter (OTC) marketplaces, businesses and financial institutions that execute large trades on behalf of their customers, and precious metals exchanges are where we get our gold and silver price quotes.
In order to guarantee quality, accuracy, and dependability, we aggregate the prices before making them available in real time to our users.
If you wish to understand the impact of rising gold prices on the global economy, please read this article, which can be a great learning resource:
The Golden Surge: What Does Rising Gold Prices Mean for the Financial Markets and Global Economy?
Is there an Official Closing Price for Gold and Silver?
Several OTC markets are used to trade precious metals on a global scale. For them, there is no “official closing price.” However, traders and analysts can either rely on their market data vendors, who determine the closing price using a tried-and-true, documented approach, or they can use the “fix” for that day.
Precious Metals: Market Data and Trading Hours
TraderMade provides real-time access to 40 CFD Markets, including 5 for Metals. Check out our CFD Data API page for more details.
Notably, CFDs are not traded round the clock. You can look for CFD Market Trading Hours through the link.
Rely on Us for Gold and Silver Market Data
With respect to well-known currencies like the US Dollar and the Euro, we have been offering precise, dependable, and aggregated information for gold and silver prices.
We are devoted to providing market data to everyone. As a result, you can use our thoughtfully created data subscription plans to acquire historical and real-time data, analyse the market, and make wise trading decisions.
Final Thoughts
The article briefly discusses the variables affecting the pricing of gold and silver, many significant characteristics of precious metals, and the significance of dealing with reputable market data vendors.
Choose TraderMade as your market data partner to guarantee that you get precise and trustworthy gold and silver price data, evaluate the market, and make long-term trading decisions.
The article is originally published on our website: How the Gold and Silver Prices are Determined?
