Live gold price per ounce in major currencies (EUR / USD / GBP). In the table below GoldCore provide a real-time spot price. If you are looking for gold price charts please visit our market information page here
Gold is probably the most liquid and highly traded commodity and currency in the world today.
What determines the gold price?
The high demand for gold as a hedge against uncertainty drives a global market that spans every continent and operates on a 24-hr basis. As a result, the gold prices are one of the most quoted metrics in the financial media, along with major currency exchange rates, the price of oil, and stock market indices such as the FTSE and the S&P 500.
The price of gold represents more than just the monetary value of a specific quantity of the precious metal; it often reflects general economic outlook and market sentiment. As a hedge against inflation, currency devaluation, and financial crisis, any significant movement is usually an essential sign of investor confidence (or lack thereof) in global markets and the global economy.
Like other commodities, underlying factors in the gold market such as supply and demand, cost of extraction and refining also determine the price of gold at any one time.
Although the gold price charts are closely tracked by financial news outlets, it is poorly understood outside financial circles or even in mainstream media. Subsequently, most people do not understand the intricacies and complexities of the global gold market.
What is Gold Worth?
There are many ways to value any commodity including gold. In ancient times, the value of gold was defined in terms of the number of goods you could barter it with. However, as trade became monetised with silver coins, the value of gold was also defined in terms of how much silver it could be exchanged for.
The relationship between the value of silver and that of gold is known as the gold-silver ratio. During the Roman times, it stood at 12:1 and in the USA in 1792, it was fixed by law at 15:1.
Today, this ratio stands at 88:1 due to the massive undervaluation in the silver market.
When you trade gold, its value is defined in monetary terms in the currency of that particular market. Contrary to popular belief, the gold is not quoted exclusively in US Dollar terms, but in the currency of the market, it is traded in.
Therefore, depending on where you buy or sell gold, the transaction will be quoted in the currency of that market or country. At the London market, for example, gold is quoted in US Dollars, British Pounds, and the Euro which reflects the international status of the market. The gold price in Ireland (and other EU countries who adopted the euro) is quoted in the Euro, while people in China buy and sell gold in Yuan.
Most news outlets quote the dollar price of gold because of the dollar’s now threatened but lingering role as the world’s reserve currency. This is mostly for convenience although it also reflects the importance of the dollar in terms of discovery in futures markets and among banks and institutions.
How is Gold Priced?
When you buy or sell gold, the amount you pay will, of course, be one of the most important considerations. Gold and other precious metals are priced per troy ounce. The benchmark price or current gold price is quoted per troy ounce.
A troy ounce is equivalent to 31.07 grams and is different from the regular or avoirdupois ounce. The regular ounce is smaller than a troy ounce and measures 28.35 grams. Aside from the difference in weight, the regular ounce is used to measure ordinary commodities such as salt and sugar and not precious metals. Although the price per gram is less used in major markets it is popular in continental Europe.
On the other hand, the troy ounce is reserved solely for measuring the weight of precious metals such as gold, silver, platinum, and palladium.
While some investment grade gold coins contain precisely one ounce of gold, coins or bars may be cast or minted in different weights including one kilo. As an investor, you might want to know, what is the price per kilo of gold?
As mentioned earlier, one ounce is equivalent to 31.07 grams. Because one kilo is equal to 1000/31.07 ounces or 32.18 ounces, the price per kilo of gold (when the price is $1300) will, therefore, be $1300 X 32.18 = $41,841
What is the price of one karat of gold?
Most people will be familiar with a karat, which is commonly used in gold jewellery. A karat is not a measure of weight, like the ounce, but a measure of purity. One karat is equivalent to 1/24 of the whole.
A karat is different from a carat, which is a measure of weight equal to 200 milligrams or 0.2grams. Carats are used to measure gemstones such as diamonds, rubies or emeralds.
24 karat gold is the purest form of gold and has 99.99% fineness. If a piece of 24-karat gold jewellery weighs 1 ounce, you can calculate the value of gold it contains by multiplying its troy ounce weight with the price of gold. Investment-grade gold coins such as the Canadian Maple Leaf are 24 karat gold and are therefore worth their full weight in gold.
However, because gold jewellery is normally less than 99% pure, you will have to calculate the weight of gold in the piece before multiplying that value by the price of gold.
Thus, if the current price is $1300 per ounce:
- 1 oz of 24-carat gold has a value of 24/24 X $1,300=$1,300
- 1 oz of 22-carat gold has a value of 22/24 X $1,300 = $1,191.6
- 1 oz of 18-carat gold has a value of 18/24 X $1,300 = $975
- 1 oz of 9-carat gold is valued at 9/24 X $1300 = $487.5
What is the Gold Spot Price?
The gold spot price is the rate that a wholesale bullion bank is willing to pay for a 400-ounce gold bar to be delivered to their vaults within 2 business days.
This is the gold price you see quoted in the financial media and is what may be termed as the cash or wholesale gold price. When someone asks, what is the gold price today? The answer is the gold spot price, which is not static but can change on a per-minute basis depending on market forces.
The gold price is quoted in two parts; the bid price and offer price or bid and ask price. The bid price is the price that the bullion bank is buying gold, while the offer or ask is the price at which the bank is selling the same quantity of gold.
The difference between the bid and ask price is known as the ‘spread’ and represents profit for the bank. The OTC (Over The Counter) market enjoys very high trade volumes and liquidity, which allows spreads to be very narrow unlike in any other market.
Gold prices are usually determined by the discovery in the London OTC market as well as at large gold exchanges such as the Comex. It is the lowest price you can pay for gold. However, since trades in the OTC market involve between 5,000 and 10,000 ounces of gold, this price is usually out of reach for individual investors.
What is The London Fix?
The London gold OTC market is the most important gold market because over 87% of all OTC trades around the world are cleared through London.
The London Fix is another popular mechanism that is used by bullion banks and institutions. This is a gold trading and pricing exercise that is conducted by five of the leading market-making members of the London Bullion Market Association. It uses a price discovery mechanism to determine a single price for all gold orders of the five banks and their clients.
The Fix is conducted by a company called the London Gold Market Fixing Ltd. The current participants in the fixing are Barclays, the Bank of China, Bank of Communications, Goldman Sachs, HSBC Bank USA, JPMorgan Chase, Morgan Stanley, Société Générale, Standard Chartered, ScotiaMocatta (Scotiabank), The Toronto-Dominion Bank, and UBS.
The London Fix began in 1919 when the Bank of England brokered a deal to sell South Africa’s gold to the gold market in London through NM Rothschild. Today, the fix is done twice a day; the 10.30 am Morning or AM Fix, and the 3 PM or Afternoon Fix (at 10:30 and 15:00 London BST).
Along with the Comex, the London Fix is an indication of institutional demand and can impact the global gold prices. It is set twice daily in US dollars but prices are also available in Euros, British pounds, Australian Dollars, Canadian Dollars, Onshore and Offshore Yuan, Indian Rupees, Japanese Yen, Malaysian Ringgit, Russian Rubles, Singapore Dollars, South African Rand, Swiss Francs, New Taiwan Dollars, Thai Baht and Turkish Lira. The gold fix in non-US dollars is indicative prices for settlement only. Large markets such as the London OTC and Comex are therefore price makers, while smaller markets are known as price takers.
What is Gold Futures Price?
The gold futures price is the amount you will pay for an ounce of gold delivered at a future date.
A futures exchange does not deal in buying and selling of physical gold bullion like in an OTC market. Instead, the trades are meant to involve gold-backed assets such as gold derivatives used to hedge against risk or future price movements in the gold market.
Gold futures, like oil or other commodity futures, include swaps and options, which set the price of gold for delivery at a future date, e.g. three, six months or more. A futures price is usually more than the spot price because it must account for the risk and uncertainty in future movements and the interest or yield foregone.
Why Is There A Premium on Gold?
It is only available to large institutional investors in the OTC market. For retail buyers, the amount paid per ounce will be higher than the spot price for gold. The difference between the gold spot price and the retail price is called the premium.
Every bullion product including coins and gold bars will trade at a premium to the spot price. This is because some gold bullion products such as gold coins, bars (mostly kilo bars) are made from the 400-ounce good delivery bar. These bars must be then converted into a smaller format and specialised products for retail buyers. Smaller coins and bars are also made from raw unrefined gold and dore gold and because its costs more per unit to produce say 400 gold bars which are 1 ounce (rather than one 400 ounce gold bar) there is a higher cost to produce and therefore a higher premium.
The premium covers the cost of refining, minting, fabrication, transportation, storage, insurance, marketing costs, as well as a small profit for the dealer. The higher the demand or limited supply of gold bullion, the higher the premium it will command. Generally, the smaller and lighter the Gold coin or Gold bar, the higher the premium.
Where is Gold Traded?
There isn’t one central gold market in the world; gold is traded in dozens of international and local markets around the globe.
There are two primary types of gold markets, the Over the Counter market (OTC) where physical gold bullion is traded, and the gold futures market, which trades paper gold or derivatives. Despite the differences between gold exchanges and the OTC market, the two markets are closely interlinked, and together, contribute to the price discovery of gold.
The largest gold markets in the world in order of size are the London OTC, The Comex Futures Exchange, The Shanghai Gold Exchange, and Shanghai Gold Futures Exchange. Together, these four markets account for about 90% of all trade in wholesale gold. Investment grade gold products are made available for sale to the investing public through thousand of gold brokers around the World.
Other important gold markets are located in Zurich, Singapore, Dubai, Istanbul, Sydney, Tokyo, and Malaysia.
The OTC Market: An OTC market is a decentralised market that trades in physical gold with little direct supervision or regulation as is mandatory in an organised exchange. Participants in the OTC gold market, who are mainly gold miners, refineries, governments, banks, gold investment funds, and high net worth (HNW) investors, trade gold between themselves via the phone or through electronic trading platforms.
In an OTC market, each trade is a private transaction between two parties, where they agree on a rate and settlement details between them. Because of this, the transactions remain confidential, which is preferable for major investors who don’t want to advertise their large positions in gold.
Gold Exchanges: Gold exchanges, on the other hand, are organised and centralised markets in a particular location that operates under the supervision of a regulator. Just like a regular stock market, all participants must register with the exchange and log every transaction.
Trades in an exchange are less flexible and operate on standardised contracts that dictate how the trade will be conducted. This is aimed at reducing counterparty risk and should promote transparency. Every trade is also logged and becomes a public record.
What’s the Right Price to Buy or Sell Gold?
As discussed in previous chapters, there is never an ideal price to buy or sell gold. The gold price represents underlying influences in the gold market which includes investor sentiment and confidence in the economy as well as supply and demand dynamics.
As an investor, it is important is to remember one vital fact about gold; it is a store of value and hedge against uncertainty. This makes gold the only proven financial insurance that can protect your financial wellbeing during tough times.
Therefore, focusing on the fundamentals in the gold market including its rarity and limited production, as well as the expected risks in the global economy is prudent when it comes to gold.