What factors do the spot market prices determine?
Spot Market is a market where securities or commodities are purchased with cash for immediate delivery. Depending on the market, immediate delivery is defined as a month. The most popular spot markets are foreign currencies, energy, natural gas, electricity, propane, oil and precious metals. The market price of market price is mainly influenced by supply and demand, speculation, economic conditions and political climate. Prices are constantly fluctuating in most markets as soon as new information is published. The price of safety or commodity will drop when its supply exceeds demand and its price increases when demand overcomes the supply. For example, if the United States imports more goods than export, then the value of the dollar will weaken. This is because exporters exchange US dollars for local currencies on a foreign currency market. If wersth has more US dollars on offer than required, then the value of the dollar decreases.
specsLanti, who realize that the futures market is not in line with the point market, will begin to decide on trading in this irregularity. This event will lead to a gap until prices on the spot and futures on the market reach a equilibrium point. One way to create a gap is when speculators continue for a long time for a longer period of time when it is not in line with supply and demand. The futures market eventually drops and the spot market will be adjusted, so both represent the real level of supply and demand.
Economic conditions affect prices on the market site as they can affect the level of supply and demand. For example, the demand for gold is increasing during the recession, so the price on the Gold market also increases. The inflation rate affects the spotted trumpets because demand will fall with the rising product price. In the case of a foreign currency exchange market, if two countries experience the same level of inflation, it will not affect their exchange rates.
Political climate is a factor in prices on the market site because new laws and regulations mayinfluence the supply and demand for commodities and securities or taxes for export. Changing policies can also have an impact on the currency exchange rate. In general, when the exchange rates increase, it creates pressure on demand for commodities and securities and reduces their prices. A remarkable exception is the gold spot market; Investors invest more in gold when their currencies fall value because it is perceived as safer than holding money.