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Published On: Wed, Feb 20th, 2013

Spot Price

Spot Price refers to the price of a commodity in the cash market.

For example, the Spot Price of Gold will be the price of one ounce of gold bought with a cash account or in an over the counter bullion dealer.  If the Spot Price of Gold bullion is $1750/ounce, the bullion dealer will charge $1750 per ounce plus bullion costs for transactions done in cash with immediate physical delivery.  On the other hand, the price of gold is often times quoted with the futures market price.  In this case, the quote for Gold will be for one ounce of gold in a three month futures contract.  While the futures price can help traders and market participants view the direction of the price of gold, physical gold is traded at the Spot Price.  The same is true for all other commodities:  often quoted in the futures price, yet physical trading at Spot Price.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

 

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