Spot Rate
Also: Spot price, Cash price, Spot rate
The spot rate is the currently valid market price of a precious metal for immediate delivery and settlement, also known as the spot price.
The spot rate (also spot price) refers to the price at which a precious metal is traded immediately on the spot market – for purchase, sale and physical or book-entry delivery within a very short period (typically two business days, T+2). It is the quintessential reference price and forms the basis for bar and coin pricing, dealer calculations and the valuation of gold ETFs and structured products.
You can always see the current gold price and silver price on this page as a real-time spot rate.
How does the spot rate form?
The spot rate forms continuously in the OTC (over the counter) market through supply and demand between banks, refineries, central banks, funds and large industrial buyers. For gold and silver, the LBMA sets the so-called LBMA Gold Price fixing twice daily as an official reference value; between fixings, however, the spot rate fluctuates freely.
Spot rate (mid) = (bid price + ask price) / 2
Dealer price = spot rate × fine weight × exchange rate + premium
The dealer buys precious metal at the bid price and sells at the ask price. The difference is called the spread; it covers trading and storage costs.
Spot rate vs. forward price (futures)
| Feature | Spot rate | Forward price (future) |
|---|---|---|
| Delivery | T+2 (immediate) | Fixed expiry month |
| Trading | OTC, 24/5 | COMEX, exchange hours |
| Reference | LBMA, Reuters | CME/COMEX settlement |
| Surcharge | – | Contango (usually) or backwardation |
If the forward price is above the spot rate, this is called contango; if below, backwardation.
Exchange rate influence
Because gold and silver are quoted worldwide in US dollars, the sterling spot rate depends on two variables: the dollar spot price and the GBP/USD exchange rate. If the dollar strengthens, the sterling spot rate falls – even if the dollar spot price remains unchanged. Current exchange rates are shown on this page.
Practical significance
- Bars and coins: Dealers add a premium (agio) to the spot rate, covering minting, storage and margin.
- Melt-value calculation: The basis for the melt-value calculator is always the current spot rate multiplied by the fine weight.
- Tax and holding period: Under UK law, whether a gain from a precious-metal sale is taxable is determined by Capital Gains Tax rules, not by any holding period – UK legal-tender coins from The Royal Mint (Sovereign, Britannia) are CGT-exempt, while bars and non-legal-tender coins may be subject to CGT above the annual exempt amount. There is no German one-year speculation period. This is not tax or investment advice.
In brief
The spot rate is the universal yardstick of the precious-metals market: anyone who understands how it forms and how premiums are built on top of it can compare offers from different dealers quickly and objectively.