Investment School

The commonly gold price terms are bid price, ask price, spot price, and fixing price. Though the above prices all indicate the value of gold, there are difference between them.

1.The bid price is the current highest price at which you could sell.

2.The ask price is the current lowest price at which you could buy.

3.The spot price is calculated based on the most recent average bid price which is offered by professional traders throughout the world.

4.The gold fixing price is fixed by the IBA, it is used as a benchmark to pricing the major global gold products and derivatives.

• Spot gold price:

  Spot gold prices are often misunderstood by inexperienced investors. Many people think that this is determined by the London Gold Market Fixing Limited, but this is not the case. The spot gold price refers to the price at which physical gold can be bought and sold at a specific time and place. In contrast, the price of gold futures takes into account the relevant time value in addition to the spot price. The spot gold price is calculated based on the latest average Bid price provided by professional traders around the world.

• London gold fixing:

  At the beginning of the last century, since London was the global gold trading centre, the London gold market played a global guiding role. At that time, the London gold price was determined by five members of the London Gold Market Fixing Co., Ltd. through a conference call. The determined gold price was used as a benchmark for the pricing of major global gold products and derivatives.

  The gold fixing price was the agreed price between banks, and the participants must be members of the London Bullion Market Association, which are Scotia-Mocatta, Barclays Capital, Deutsche Bank, HSBC and Societe Generale. The Gold Fix was published in the morning and afternoon London time of the trading day, and these included the pricings in US Dollars (USD), British Pounds (GBP) and Euros (EUR).

  The gold fixing price was quoted by the chairman of the meeting at a price close to the spot market gold price. Members will then participate bidding based on their customers’ supply and demand until a gold price is set.

  The above pricing mechanism was replaced by the new LBMA gold pricing mechanism price in 2015. The new pricing mechanism continued the previous arrangement of publishing two fixing prices daily. The LBMA Gold Price is administered independently by ICE Benchmark Administration (IBA). The platform is electronic, tradeable, auditable and in line with the IOSCO Principles for Financial Benchmarks. Today, the number of members participating in the pricing mechanism has increased to 16 institutions, including Bank of China, Bank of Communications, Citibank, Goldman Sachs, HSBC, Industrial and Commercial Bank of China and other international financial institutions.

International Major Gold Market:
Gold exchanges are located in various international financial centers and are an important part of the international financial market. At present, there are more than 40 gold markets in the world, and a global market structure with the international gold market as the core and the local gold market as the auxiliary is being formed.

• London Gold Market

  The London Gold Market is the largest gold market in the world with a long history. In 1804, London replaced Amsterdam as the world's gold trading center. In 1919, the London Gold Market was formally established, and market participants set a price for gold twice on each trading day. The London fixing price affects New York and Hong Kong transactions. In 1982, the London gold market specialized in spot trading; the futures market opened in April 1982.

  The London Bullion Market is an over-the-counter market where transactions are conducted among members of the London Bullion Market Association (LBMA) regulated by the Bank of England. London gold is priced in U.S. dollars in ounces, and the quotation is mainly based on the spot price of gold in the London market.

• U.S. Gold Market

  The US gold market developed in the mid-1970s, mainly the COMEX branch of the New York Mercantile Exchange, which was later merged into CME. The U.S. gold market is dominated by gold futures trading, and has become the world's largest and most active gold futures market, as well as the most efficient and complex futures trading institution. The main trading objects in the US gold market are gold, silver, and copper, and some financial derivatives, gold futures and gold options trading rank first in the world, and it is a recognized precious metal trading center. The current trading varieties are gold futures, mini options, options and funds.

  The New York Mercantile Exchange (NYMEX) is a commodity futures exchange. In 1975, the New York Mercantile Exchange (COMEX) began to conduct gold forward trading and became the center of global gold forward trading. In August 2008, it was owned and operated by Chicago CME Group.

• Zurich Gold Market

  Zurich gold market is developed after World War II. Since the 1960s, Zurich has become the world's second largest gold trading market. Zurich gold market has no formal organizational structure, responsible for the clearance by the three major Swiss banks: UBS, Credit Suisse and Union Bank of Switzerland.

  The Zurich Gold Market does not have the same fixing mechanism as the UK. At any time of each trading day, the transaction price is based on the agreement between the supply and demand parties, and the price is the official Zurich gold price. Gold price fluctuations throughout the day on this basis are not restricted by the price limit.

  Switzerland is not only the world's largest new gold transit station, and is also the world's largest private gold storage center. Zurich gold market’s position in the international gold market is after London.

• Hong Kong Gold Market

  The Hong Kong gold market has a history of more than 100 years, the most important of which is the Chinese Gold and Silver Exchange (CGSE) which is established in 1910. The Hong Kong gold market is mainly composed of two parts, they are the CGSE developed on the basis of the traditional gold market, and the local London gold market established by gold dealers in London and Zurich.

  CGSE plays an important role in Hong Kong's gold market. Due to the advantage of time zone, the Hong Kong gold market has filled the gaps in the New York, Chicago and London markets. It can connect Asia and Europe, form a complete world gold market, and promote Hong Kong to become one of the world's major gold markets. The Hong Kong gold market is the only area where physical gold, contract gold and futures markets can be traded at the same time.

  The global gold market is a trading network spanning Europe, America and Asia, operating 24 hours a day. In addition to the above four international gold markets, Tokyo, Sydney, Dubai, Singapore, Mumbai, Rio De Janeiro, and Shanghai are all world-renowned gold markets.

Unlike other commodities, the international gold market is a globe-spanning market with continuous 24-hour operation, thus investors can trading gold around the world market in any time. Below is the famous world gold market gold trading hours (Local time and GMT time). GMT is the abbreviation of Greenwich Mean Time; it is also called London Time.

• Time of US-New York gold market

  Opens at 8:20am - closes at 1:30pm (local time)
  Opens at 13:20 GMT- closes at 18:30 GMT (GMT Time Zone)

• Time of US-New York Electronic Trading

  Opens at 6:00pm - closes at 5:15pm (local time)
  Opens at 23:00 GMT - closes at 22:15 GMT (GMT Time Zone)

• Time of UK - London gold market

  Opens at 8:00am - closes at 5:00pm (local time)
  Opens at 8:00 GMT - closes at 17:00 GMT (GMT Time Zone)

• Time of Brazil - Sao Paulo gold market

  Opens at 10:00am - closes at 5:00pm, then opens at 5:45pm - closes at 7:00pm (local time)
  Opens at 13:00 GMT - closes at 20:00 GMT, then opens at 20:45 GMT - closes at 22:00 GMT (GMT Time Zone)

• Time of China - Shanghai gold market

  Opens at 9:00am - closes at 11:30am, then opens at 1:30pm - closes at 3:00pm (local time)
  Opens at 1:00 GMT - closes at 3:30 GMT, then opens at 5:30 GMT - closes at 7:00 GMT (GMT Time Zone)

• Time of Hong Kong gold market

  Opens at 9:00am - closes at 12:30pm, then opens at 2:30pm - closes at 5:00pm (local time)
  Opens at 1:00 GMT - closes at 4:30 GMT, then opens at 6:30 GMT - closes at 9:00 GMT (GMT Time Zone)

• Time of India - Mumbai gold market

  Opens at 10:00am - closes at 11:30pm (local time)
  Opens at 4:30 GMT - closes at 18:00 GMT (GMT Time Zone)

• Time of Indonesia - Jakarta gold market

  Opens at 9:30am - closes at 5:30pm (local time)
  Opens at 2:30 GMT - closes at 10:30 GMT (GMT Time Zone)

• Time of Japan - Tokyo gold market

  Opens at 9:00am - closes at 3:30pm, then opens at 5:00pm - closes at 11:00pm (local time)
  Opens at 00:00 GMT - closes at 6:30 GMT, then opens at 8:00 GMT - closes at 14:00 GMT (GMT Time Zone)

• Time of Pakistan - Islamabad gold market

  Opens at 10:00am - closes at 6:00pm (local time)
  Opens at 5:00 GMT - closes at 13:00 GMT (GMT Time Zone)

• Time of Turkey - Istanbul gold market

  Opens at 9:45am - closes at 5:30pm, then opens at 5:45pm - closes at 9:40am (local time)
  Opens at 7:45 GMT - closes at 15:30 GMT, then opens at 15:45 GMT - closes at 7:40 GMT (GMT Time Zone)

• Time of United Arab Emirates - Dubai gold market

  Opens at 8:30am - closes at 11:30am (local time)
  Opens at 4:30 GMT - closes at 7:30 GMT (GMT Time Zone)

Gold Lending Rate
In gold investment, the investors can carry trade via the gold market-related interest rates. Gold rates include Gold Forward Offered Rates, London Interbank Offered Rate and Gold Lease Rate.

GOFO represents Gold Forward Offered Rates; it is published by the London Bullion Market Association (abbreviated as LBMA) at London time 11:00 am on its website. These are rates at which contributors are prepared to lend gold on a swap against US dollars. The contributors are Members of the LBMA who are the Market Making. There are The Bank of Nova Scotia, Barclays Bank, Deutsche Bank AG, HSBC Bank, Goldman Sachs, JP Morgan, Société Générale and UBS. The rate varies from time to time. Generally, the deadline of GOFO includes 1 month, 2 month, 3 month, 6 month and 12-month.

The costs of borrowing gold are calculated in ounces, rather than dollars. Typically, the main lenders of gold are the central banks; whereas, generally the large gold dealers, gold companies and jewelry processing enterprises tend to borrow gold. There are two main factors affected lending rates, one is the demand differences of spot gold and futures gold, the other is the current interest rate of borrowing dollars.

LIBOR represents London Interbank Offered Rate, it is the average interest rate used in borrowing from other banks. The Libor and Euribor used as primary benchmark for short term interest rates around the world. Libor is calculated and published by Thomson Reuters who stands for the British Bankers' Association (BBA). GLR stands for Gold Lease Rate.

Gold is as an investment product, its price is extremely important for the investors. However, in the same time, the gold price is varying from measurement unit. In the gold market, the different countries are with different habits, rules and local measurement units, therefore, the measurement units of the world gold trading are different. The following lists several more common measurement units in the international gold markets:

Measurement Unit For Gold: