The international gold price is therefore set by 2 markets, the London OTC gold market and the COMEX gold futures market, both of which are paper gold markets and both of which generate trading volumes far higher than the amount of physical gold underpinning this gold trading. See BullionStar's Infographic of the COMEX gold futures market for more details. to receive 100 ounces of gold in the form of a 100 oz gold bar or three 1 kilogram gold bars, nearly all COMEX gold futures contracts are closed out, cash-settled or rolled over, and only a tiny fraction of contracts are ever delivered. Although this gold futures contract offers a physically deliverable option of gold, i.e. The most actively traded gold futures contract on the COMEX is the 100 oz gold contract. The COMEX is an exchange-based derivatives market which lists gold futures contracts and which facilitates the trading of these contracts. See BullionStar's Infographic of the London Gold Market for more details. ![]() Huge volumes of unallocated gold trades are executed on the London gold market each day that are many multiples of the amount of physical gold underlying these bilateral contracts. Unallocated gold is a form of synthetic gold which is fractionally-backed by bullion banks and where trades are predominantly cash-settled. However, the unit of settlement in the London OTC gold market is not physical gold but unallocated gold. The majority of gold trading in the London OTC gold market is spot gold trading (for immediate delivery of gold) in large quantities, generally between quantities of 5,000 to 10,000 troy ounces of gold. The London Gold Market is not an exchange-based market and so is referred to as an Over-the-Counter (OTC) gold market. The London Gold Market is a wholesale gold market in which participants trade bilaterally, either by phone, via broker, or over electronic platforms. Conversely, a gold futures contract is in backwardation when the gold futures prices is below the spot price. A gold futures contract is said to be in contango when the futures price is higher than the spot price. The Futures Price of Gold is a price at which delivery of gold could take place on a future delivery date based on a gold futures contract agreement between transacting parties. Market makers keep Gold Spot price quotes current by quoting continuous bid-ask prices during trading hours. 2 business days after trade date, upon which payment has to be made. Settlement date is normally trade date + 2, i.e. ![]() By convention, the Gold Spot price is quoted in US dollars per troy ounce, and the quotation refers to a standard amount of gold in the range of 5,000 to 10,000 troy ounces. The Spot Price for gold, or Gold Spot, is the current market price at which gold can be bought or sold in the wholesale market for immediate delivery and short-dated settlement. Local gold markets around the world are gold price takers and take in the international gold price, using it as a basis for setting and quoting their own local country gold prices. In other words, the London OTC and COMEX gold markets are jointly responsible for gold price discovery of the international gold price. Between them, these two gold markets essentially determine the international gold price, as they account for a combined 85% of global gold market turnover. In practice, the international price for gold is set by the gold markets which have the highest trading gold volumes and gold liquidity, namely the London Gold Market and the COMEX gold futures market. ![]() The international gold price is a US Dollar price for gold established via gold trading on the world’s largest gold markets.
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