Spot Gold: All You Need To Know!
Gold is a widely tried and trusted class of assets and is highly preferred by investors in order to attain diversification in their portfolio. This is why through the ages, people have been investing in gold.
The wholesale and retail trade of gold in UAE is very well developed. The sale and purchase of gold in UAE are a time tested investment that has proved to provide the investor with substantial benefits. Gold trading in Dubai includes the world’s largest trading venues and shopping malls for selling jewelry pieces.
What is Spot Gold?
The spot market for gold is a path that is frequently walked by both institutional and individual investors, in order to take advantage of the volatility in prices for their profit.
Another aspect that makes spot gold trading highly attractive in the eyes of the investors is that it is similar to the trading of futures. Therefore, there is not any need to hold the gold physically, a document suffices.
What is a Spot Gold Price?
The spot price of gold signifies the current rate at which the yellow precious metal can be sold or purchased at a fixed place and time. The explicit value of gold in the marketplaces is defined with the help of this gold rate in UAE.
What are Spot Markets or Spot Exchanges?
The place where gold is sold or bought for almost instant settlement at a fixed is known as the spot market.
Such markets do not have any actual physical location but are more of a sort of distributed market that consists of bullion market traders from all across the globe within a shared set of guidelines.
Spot exchanges are a kind of electronic marketplace where bulk quantities of commodities are traded. Precious metals, steel, and oil are some examples of the traded commodities. The sellers of the commodity store their goods in the warehouse which is operated by the exchange.
The commodity’s quality is checked in such warehouses and then a receipt is issued if the quality of the commodity is as mentioned. The receipt obtain is then posted on the exchange where the buyers from all around can bid on it.
Having possession of the receipt denotes right over the commodities. Under such a setup, the sellers feel more empowered to sell their goods to larger sized markets instead of limiting them to a physical marketplace. The buyer of the commodity can submit the obtained receipt to the warehouse in order to take ownership of the commodity as per the details on the receipt.
Where Can You Trade Spot Gold in UAE?
There are many commodities in Dubai and UAE where gold can be bought and sold, some of them are:
- Dubai Gold and Commodities Exchange (DGCX)
- National Bullion House (NBH)
- Gold Fund
What is Spot Gold Trading?
Spot gold trading allows an investor to achieve diversification in their portfolio and hedge against market volatility and inflation. Gold has been a popular method of diversification among the investors and the spot exchanges present in the country help the investors achieve this.
Spot gold markets allow one to purchase and sell in their national currency. For instance, in Dubai, you will be able to buy and sell in AED.
When an investor purchases gold bullions in the spot market, he or she is in a position to make a profit if there is a rise in the gold rate in UAE. And if there is a fall in the gold price in UAE, the investor can hold onto the receipt for longer to minimize his or her losses.
The investor does not have to pay the full amount to purchase a commodity in spot trading. In some cases, you can own the quantity by paying just an initial margin as good faith. This good faith deposit is generally a percentage of the overall contract value.
The Bottom Line
There are many benefits involved in spot gold trading and the techniques of trading can even be customized as per the risk preferences of the investors.