What is the gold spot price and how is it set
When the news says "gold is up", it refers to the spot price. This guide explains what it is, who sets it and why the price you are offered is different.
Definition
The spot price is the value at which gold trades for immediate delivery on the international wholesale market. It is quoted in US dollars per troy ounce of fine gold. Banks, refiners, dealers and jewelers around the world use it as the reference for their own prices.
The troy ounce
Gold is not weighed in regular (avoirdupois) ounces but in troy ounces. One troy ounce equals 31.1035 grams, while a regular ounce is about 28.35 grams. So to convert the spot price to grams you divide by 31.1035, not by 28.35.
Where is the price formed?
There is no single gold exchange. The price comes from continuous trading in several centers:
- London: the world's largest physical gold market. Twice a day the LBMA Gold Price is published (10:30 and 15:00 London time), which many companies use in their contracts.
- New York (COMEX): the main futures market. Its contracts strongly influence short-term prices.
- Shanghai, Zurich, Hong Kong and Dubai: important physical trading hubs, especially for Asia.
Because these markets follow one another across time zones, gold trades almost 24 hours a day, from Sunday evening to Friday afternoon (US time). On weekends the price stays at the last close.
Bid and ask
There are always two prices: the bid, what a buyer is willing to pay, and the ask, what a seller wants. The difference is the spread. The published spot price is usually the midpoint.
Why does a local buyer pay less?
The spot price applies to fine gold, in large amounts, delivered in an international hub. A piece of jewelry, a coin or a lot of doré must go through assaying, melting, refining, transport and insurance before it reaches that market. Each buyer deducts those costs plus a margin. Knowing the spot price tells you how much is being deducted so you can negotiate better.
See the live spot price and convert it to your currency on the home page.