Precious metal prices are quoted in troy ounces and fluctuate constantly based on global supply, demand, and economic conditions. Understanding pricing mechanisms helps build trading platforms and investment tools.
Spot Price vs Futures Price
Spot price is the current market price for immediate delivery of physical metal. It's determined by active trading on commodity exchanges (COMEX, London Bullion Market). Futures price is for delivery at a future date and includes storage and interest costs. Spot price is what most investors reference and what APIs typically provide. The difference between spot and futures (contango or backwardation) indicates market sentiment.
Troy Ounce Measurement
Precious metals are measured in troy ounces (ozt), not regular ounces. 1 troy ounce = 31.1 grams, slightly heavier than a regular ounce (28.35 grams). When APIs return "$2,000 per ounce," they mean troy ounce. For jewelry calculations, convert: price per troy ounce ÷ 31.1 = price per gram. This standardization enables global price comparison.
What Drives Precious Metal Prices
Gold and silver prices respond to: economic uncertainty (safe-haven demand during crises), inflation expectations (metals preserve value), currency strength (weak dollar = higher gold prices), interest rates (low rates favor gold over bonds), jewelry/industrial demand (especially for silver), and central bank purchases. Understanding these factors helps predict price movements and build informed trading features.