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“How much is the price reaches to buy (sell)!” Do you often have this idea?
When considering buying or selling gold, the most important thing is “price.” The following will explain the issues that people are concerned about: “What is the transaction price of 1 kg of gold?” and “Gold pricing setting policy”.
Due to frequent global gold transactions, gold prices are constantly changing. Before trading gold, it is recommended that you may refer to the instructions in this article!
The pricing standard of Gold Transaction Index Price
Friends who are interested in buying and selling gold and care about the gold market must first know “how exactly is the price of gold set?” If you don’t know the rules and just blindly trade, it is easy to incur huge losses. High security is a major advantage of holding gold. If you lose money, you will lose the advantage of gold trading. Therefore, we must be particularly cautious.
Gold trading is operated on the global market, so the price of gold changes at any time 24 hours a day. Even after the Malaysia market closes, gold continues to be traded in the trading markets of Switzerland, London and New York.
Looking at global gold trading, the London and New York markets are the two most important markets. London market is the famous gold spot trading center among them.
A digital system is used to record the order of gold, from which the LBMA (London Precious Metals Exchange Association) gold price is calculated, which the index price of gold trading.
Through this pricing mechanism, the transaction price per troy ounce (*Note 1) in the international market can be obtained.
Note 1: In the European and American gold markets, the unit of trade is the troy ounce (ozt), which is approximately 31.1035 grams.
Focus on exchange rates
Compared with other financial products, gold trading prices are considered stable, but there are also many examples of exchange rate fluctuations. When trading gold in Malaysia, don’t forget to keep an eye on the exchange rate.
The international price of gold is denominated in U.S. dollars. For example, suppose “US$1,200 per troy ounce of gold”. Since we are buying in Ringgit Malaysia, it is more advantageous to buy gold when the Ringgit Malaysia appreciates. Conversely, it is more profitable to “sell gold” when the Ringgit Malaysia depreciates.
Under the above assumptions, there are the following situations:
Situation 1 [ USD 1 = RM4 ]
At USD1,200 per troy ounce, the Ringgit Malaysia required to buy 1 ounce of gold is RM4,800.
Situation 2 [ USD 1 = RM4.50 ]
At USD1,200 per troy ounce, the Ringgit Malaysia required to buy 1 ounce of gold is RM5,400.
Situation 3 [ USD 1 = RM5.50 ]
At USD1,200 per troy ounce, the Ringgit Malaysia required to buy 1 ounce of gold is RM6,600.
Even if the international gold price is the same, the above-mentioned spread will be caused by exchange rate fluctuations. Nevertheless, it is necessary to evaluate the exchange rate and the fluctuation of the gold price together. After comprehensive consideration, the balance between the two is required to judge whether it is the time to buy or sell.
Price benchmark for 1kg gold in year 2020
After having a basic understanding of the pricing method of gold prices, “How much is the price of 1 kg of gold now in 2020?” First of all, we must convert the international price of 1 ounce of gold to the price of 1 gram of gold.
One ounce is approximately equal to 31.1035 grams. Divide the international gold price by 31.1035 to get the dollar price of one gram of gold.
Multiply it by the market price of the day and then multiply it by 1,000 and covert 1 gram to 1kg, and you can get the price of 1kg of gold.
With reference to the data released by the Bank of Taiwan, the price per troy ounce in September 2020 is approximately US$1962.69.
The average exchange rate is 1 US dollar to 29.2210 Taiwan dollars.
Use these two numbers for calculations,
1962.69÷31.1035×29.2210×1000=1,843,900.67
It can be seen that the price of 1 kg of gold is about 1.84 million Taiwan dollars.
However, there is a handling fee for gold trading, so this price is not equal to the actual buying and selling price.
The aforementioned price is only used as the benchmark price for 1 kg of gold trading.
Identify the best opportunities for gold trading
It has been explained how to set the trading price of gold, what factors will be affected when trading in the Ringgit Malaysia.
These numbers will fluctuate greatly due to the current situation. It should be noted that entering the market without knowing it can be quite dangerous. It is difficult for laymen to predict future gold transaction prices and exchange rate fluctuations. This article suggests that investors should also consider the global situation and economic conditions, as well as the budget, before conducting gold transactions.
