Gold Spot Down, Gold Futures Up
jmski52
Posts: 23,927 ✭✭✭✭✭
It's an interesting morning, as Spot Gold is down by $14.70, while Gold Futures are up by $10.50.
What does a divergence like this actually mean?
Yes, contango is restored, but what causes the price of gold to go in different directions between the spot market and the futures market?
Looking for your opinions..........
Q: Are You Printing Money? Bernanke: Not Literally
I knew it would happen.
I knew it would happen.
0
Comments
Huh?
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Retiring at 55, what day is today?
Huh?
Normally, both the Spot Price and the Futures Price move in the same direction, and usually the Futures Price is higher due to the costs associated with storage, interest and insurance. That situation is referred to as contango, which is the "normal" state of the market.
A short time ago, the market was not in contango. It was in backwardation, which is the opposite of contango and means that the cash market price was higher than the futures price. This is not normal and indicates that something is amiss in the market.
My question involves the fact the Spot Price went down while the Futures Price went up. What could have caused contango to return to the market?
I knew it would happen.
Maybe some large entity wants to lock in the current price of gold, but actually buy it in calendar year 2026 rather than right now ? If so, it might be for tax purposes.
Just got this e-mail from Macy's
75% off gold jewelry? Our Lowest Prices before Christmas are HERE
There are funds which invest in commodities which need to rollover those contracts. At various times, backwardation and contango flip or extend further than expected.
It's natural to have the 2 prices move together or diverge depending on what the commotity trading funds (CTFs), quants, and hedge funds are doing.
.
That might be a decent deal.
However, the markup on retail jewelry compared to wholesale jewelry is often 10:1 .
.