Gold futures (GC=F) opened Monday at $4,218.50 an ounce, down 0.9% from Friday’s closing price of $4,254.90. In early trading, the price of the precious metal rose to almost $4,300.
Gold’s latest rise coincides with declines in cryptocurrencies and stock futures, a sign that investors could be de-risking their portfolios in early December. Early this morning, Bitcoin (BTC-USD) was down 5.6% to around $86,000 after eclipsing $126,000 in October. S&P 500 futures (ES=F) fell 0.6% before the open on Monday.
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Meanwhile, bets are high that the Federal Reserve will cut interest rates by a quarter point next week. CME FedWatch currently estimates the probability of a rate cut at 87.6%. Lower interest rates benefit gold prices by reducing disposable income from competitive yield-producing assets such as cash.
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Current price of gold.
The opening price of gold futures on Monday was 0.9% lower than Friday’s close. Below is how the opening price of gold has changed compared to the past week, month and year:
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A week ago: +3.9%
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A month ago: +4.6%
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One year ago: +60%
On November 14, gold’s annual gain was 63.4%.
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The price of gold can be quoted in multiple ways because the precious metal is traded in different ways. The two main gold prices that investors should be aware of are spot prices and gold futures prices.
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The gold spot price is the current market price per ounce of physical gold as a commodity, sometimes called spot gold. Gold ETFs that are backed by physical gold assets generally track the spot price of gold.
The spot price is lower than what you would pay to buy gold coins, bars, or jewelry, as your total price will include a margin called the gold premium that covers refining, marketing, dealer overhead, and profit. The spot price is more like a wholesale price, and the spot price plus the gold premium is the retail price.
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Gold futures are contracts that call for a transaction in gold at a specific price on a future date. These contracts are traded on the exchange and are more liquid than physical gold. They are settled on or before the contract expiration date, either financially or by delivery. A cash settlement involves paying the contract profit or loss in cash. Delivery means that the seller sends physical gold to the buyer for the contracted price.
Supply and demand determine gold spot prices and gold futures prices. Factors that influence the supply and demand of gold include:
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Geopolitical events
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Central bank purchasing trends
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Inflation
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Interest rates
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Mining production
More information: Who decides how much gold is worth? How prices are determined.
Whether you are following the price of gold from last month or last year, the gold price chart below shows the constant rise in value of the precious metal.