One of the world's most popular commodities, Gold has a long history as one of the purest forms of money. It has historical, cultural and financial value and remains, to this day, a go to asset in times of market volatility.
Whether it be through buying ownership of physical gold, investing though ETFs or day trading gold by speculating on its short-term price movements, market is inherently global anis traded continuously throughout all time zones.
Like other assets within the economy, Gold and the price of other precious metals is dependent on several overlapping factors. Traders primarily use two pricing models to estimate the potential investment value of gold. The first is the Gold Futures Price. These are contracts for the physical delivery of a specified amount of gold on a set date in the future. However, are also influenced by numerous factors: the spot price of gold; the predicted changes in supply of and demand for the precious metal; the estimated cost of transporting and storing the physical gold; and the risk-free rate of return for the holder of the gold. Since the physical gold is not immediately delivered upon purchase, these trades are primarily electronic. They’re also highly risky because of the unpredictable nature of supply and demand factors.
The second is the Gold Spot Price. This is the price of gold that is to be delivered immediately after purchase. If you were to average the net value of all currently traded gold futures contracts for the nearest month, you would get the gold spot price. In a normal market, gold futures prices are much higher than the spot price of gold. However, in times of extraordinary demand for physical gold, the spot price can be higher than the futures price.
Gold is not the most exciting asset class. But that’s a major part of its draw for many. In times of turmoil, investors turn to assets that are immune to whatever is striking fear into the markets. As such, Gold does remarkably well when most traditional markets see a downturn, and once stability resumes, and investors feel it is safe for them to dip their toes back in the water of the stock market, gold action cools off. But that stability found in its scarcity and tangibility means investors will continue to diversify into it. Because if there’s one emotion investors can’t seem to stomach, is uncertainty.
News regarding the precious metal can come from a myriad of sources from mining companies to government treasuries! New Gold reserves are being explored every year and several of the world’s largest economies hold sizable amounts (we’re looking at you America!).
Ready to join the Gold Rush? Why not try using our Gold price prediction tool? Everyday Pynk users (or 'Pynksters' as we call them) are rewarded for submitting price predictions on the price of Gold and other assets. Learn about the price of Gold and keep an eye on the value of Gold and earn rewards as you do.Try Predicting