What You Should Know About Gold Price in Singapore
Gold’s price in Singapore is inversely related to SGD’s value; a stronger Singapore dollar tends to make gold’s price lower and a lot more controlled. On the other hand, a weaker SG dollar drives gold’s price higher as people tend to trade and invest in dollars when SGD is strong. However, when the SG dollar is weak like during times of economic certainty, people prefer to invest in gold through gold coins, funds, and other investment vehicles.
Gold Futures Price in Singapore
Traders primarily use two pricing models to estimate gold’s potential investment value. The first one is through a futures contract, which is an agreement for the delivery of a specific amount or quantity of gold within a set date. Multiple factors affect the price of gold futures contracts including gold’s spot price, predicted changes in demand for and the supply of the precious metal, cost of the storage and transportation of physical gold, as well as the rate of return that’s risk-free for the gold’s holder.
Since physical gold isn’t immediately delivered after its purchase, trades are generally electronic. They are also highly risky from the fact that the supply and the demand of gold have an unpredictable nature.
Gold Spot Price in Singapore
Another pricing model is the gold spot price. The spot price is gold’s price that’s to be delivered as soon as the purchase is made. You would be able to get gold’s spot price by taking the average of all currently traded gold futures contracts’ net value. In normal markets, the price of gold futures is much higher compared to gold’s spot price. However, during times when physical gold is in demand, the spot price is often higher as opposed to the futures price.
Three external factors have an influence on gold pricing in Singapore.
- Market Conditions
Economic and political events are shaping Singapore’s market conditions, in turn affecting gold prices. Essentially, the gold price in Singapore reflects the nation’s economic situation.
- Gold Supply and Demand
Supply and demand, a basic economic principle, is among the major influencers of commodity prices. Whenever there’s a high demand for gold in Singapore and the supply of this precious metal is low, the price of gold in Singapore rises.
If the supply of gold in Singapore is high with a low demand, gold’s price will decrease as well. Gold is finite, which means supplies are always limited. According to the measure of some analysts, the world peaked its supply of gold years ago, which means production levels are only set to decline. The demand for gold from central banks, investors, and the technological and medical sectors, however, remained strong.
- Currency Depreciation
SGD depreciation occurs when the currency of the country loses its value with respect to other foreign currencies. Monetary policy like quantitative easing and inflation are two of the main causes of the depreciation of the country’s currency.
Since gold in Singapore tends to appreciate or maintain its value, investors protect all of their portfolios with gold when SGD is subjected to a significant loss in its purchasing power.
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Gold In Singapore