The financial gold market is a trading platform where operations for the sale and purchase of precious metal are performed. Considering the organization, such centers are the unions of various banks and companies that provide refining services and produce the proper ingots.
The financial gold market: features of pricing and transactions
The role of sellers in this market is assigned to countries where gold is mined, large banks, legal entities and individuals who have reserves of the metal. Buyers are companies, industrial enterprises, private individuals and investors. The main financial centers of gold for a long time are London and Zurich. Metal 995 or 999 is being sold, most often standard-size ingots of 12.5 kg each. On gold, which is sold on the international market, must be present the stamp of the refining company and the mint. For domestic trading platforms, ingots can be from 5 g to 1 kg, also in the form of plates, coins, sheets, and sand.
The formation of the value of gold is affected by supply and demand. In London, operations are conducted in the bullion market, controlled by the London Gold Market Association. Its members are divided into 3 groups:
● market participants, including large banks;
● bidders from other countries eligible to take part in the auction.
The cost of gold is formed at 10:20 and 15:00. The procedure for making payments is similar to that on currency exchanges. In the financial gold market in London, the spot price is determined. Forward value takes into account exchange rates and interest rates.
Gold markets are legal organizations. But if private transactions are prohibited in the country or their conditions are not beneficial, the interested parties carry out the sale and purchase illegally.
Sites created for operations with gold cover the share of domestic needs of the state, but part of the markets is of regional and international importance. Thanks to an advanced digital technology system, gold trading can be carried out at any time of the day or night.
The cost of the metal varies depending on supply and demand. In the 60s, the price of gold in the market began to grow, and eventually, it overtook the official figure. To keep the indicator at the level of this value, the largest banks of different countries united, which didn’t save the situation much. As a result, it was decided to form the official price for the implementation of actions between the central financial institutions.
Venture transactions, which are forward and futures contracts, are popular in the gold market. They are concluded for a period of 1, 3, 6 months with a fixed price, which was registered at the time of signing the transaction.