What Is the Difference between a Spot Gold Price and a Gold Fix Price?

What is a spot price and why is it sometimes different from the London Gold Fix price?

The spot price (also known as the spot rate) of gold is the price that is quoted for immediate (spot) payment and delivery.  [NOTE: Settlement can be 1-2 days after the trade date, but the price is determined immediately.]  When you’re investing in the stock market, it’s called the cash price.

Gold is traded throughout the world, which means it is being traded somewhere 24 hours a day.  To make matters more complex, gold takes on many forms ranging from the abstract (such as futures contracts) to the tangible (such as jewelry and coins).

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What Is Gold Fixing?

The primary way that the gold price is determined as a worldwide standard, each day, is the London Gold Fixing procedure.

When you see a gold chart that is labelled London Gold Fix, what does that mean?  At 10:30 a.m. and 3:00 p.m. (London time), the five members of The London Gold Market Fixing Ltd. have a telephone conference call to determine the price of gold at that moment based upon supply and demand.  

While this is done with the intention of settling contracts between members of the London bullion market (a wholesale over-the-counter market for trading gold and silver), it is also the standard measurement for pricing gold products and derivatives throughout the world’s markets.

Gold prices are fixed in United States dollars (USD), Pound sterling (GBP), and European euros (EUR).  The London PM fix, which is done when the U.S. markets open, is considered to be the primary reference price for the day, and is the price used most often in contracts.

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