Much like trading currency pairs, spot metals enable traders to take a long or short position for example, in gold (XAU/USD) or silver (XAG/USD) while simultaneously taking the opposite position in the US Dollar or other major currencies. Spot Precious metals trading is an over-the-counter market globally. Prices float freely based on supply and demand. The spot price is the price quoted for the metal to be paid - including delivery - two days following the date of the actual transaction (also known as the settlement date).
Spot Precious Metals trade in a similar manner to how currency pairs are traded in the foreign exchange market. Trading is available 24 hours a day from Sunday at 24h00 to Friday at 23h00 (CAT). During the US Winter, trading will be from Monday 01h00 to Friday 24h00 (CAT). Although there is no central market, the main centers for trading Spot Precious Metals are London, New York and Zurich.
Liquidity is typically highest when European market hours overlap with trading in New York - roughly four hours a day during the morning for US traders. There may be some illiquid periods for trading spot Precious Metals around the close of the US market (17h00 to 18h00 ET). The twice-daily gold fix and daily silver fix in London helps set reference points for intraday prices. Settlement happens in much the same way as it would for foreign exchange settlements.
There are many different reasons that drive investors to trade Spot Precious Metals. Some of these are:
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