Following the tradeonlinemarket of the Nixon government in 1971, other countries also abandoned the USD-gold peg. Finally in the year 2000, the Swiss Franc abandoned the gold standard being the last currency to do so.
I. Markets’ Adjustments
Since the Bretton-Woods System’s abandonment, gold trading has gone through several changes. Now that individuals are permitted to own and trade commodities such as gold and silver, several markets need to adjust or change in order to be a suitable setting for traders of these valuable commodities. These markets’ changes enable traders to have a meeting place where they can exchange commodities with conditions that provide the ideal pricing equity and dealing transparency.
Other countries trade and exchange gold at Over-the-Counter (OTC) markets using the major wholesale gold trading market known as the London Bullion market. A lot of the limited trading of this precious metal is conducted at some markets in Japan and the US (New York Mercantile Exchange or NYMEX). Individuals also trade this precious metal as instruments on the numerous trading platforms of the brokers who provide spot gold trading as a vehicle of investment.
II. Determinants Of Gold Prices
The London gold price fix is the determinant of the prices of this commodity. The London price fix, usually acquired from the forces and speculations of demand and supply, is a process where 5 members of the London Gold Market Fixing Ltd communicate twice a day to discuss and decide on the prices of gold futures contracts.
A well-known method of earning from this commodity is through spot gold trading. The forces of supply and demand are usually the determinants of the prices of spot gold (gold vs. USD). Between the two forces, demand is usually considered the most important determinant.
Basically, this commodity is kept and stored for future use. It is something that symbolizes wealth and is used as protection or defense from economic uncertainty, which is why this precious commodity is rarely consumed.
Aside from supply and demand, speculations also provide an effect on the price of this precious metal. This influence tends to happen in the markets of gold futures and options, in which there is a potential great way to earn from this commodity.
