How Is The Price of Gold Determined?

Understanding the spot price

When buying and selling gold, the price is usually agreed using the gold ‘spot’ price. This price fluctuates constantly due to supply and demand, as well as the current strength of currency and is usually displayed in real time on bullion sites.

Understanding the fixed price

The fixed price (known as ‘the fix’) is sometimes used when buying and selling large quantities of gold and is set twice daily by electronic auction.

Understanding the future contracts price

Futures pricing is a price agreed by a supplier and a customer for a specified weight of gold which will be delivered at a specified time in the future.

Who sets the price of gold?

The London gold ‘fix’ price is set by large number of traders, all of whom are members of the LBMA (London Bullion Market Association) in the UK. Since 2015, the LBMA’s administrator, the IBA (ICE Benchmark Administration), has worked together with the LBMA to set the gold price using an electronic auction system.

How is the ‘fixed’ price of gold set?

The gold ‘fix’ price is electronically set twice daily in the UK by the LBMA who calculate the price based on auctions. A number of members of the LBMA, along with the chairman, come to an agreement to buy and sell at a specific, ‘fixed’ price set in auctions. These auctions allow the buying and selling of physical gold and are played out in rounds of 45 seconds. After each of these rounds, the difference between the volume sold and volume bought is calculated. If this difference is calculated to be larger than 20,000, the IBA announce a new auction round with a new price.

How is the ‘spot’ price of gold set?

The gold ‘spot’ price, sometimes referred to as the ‘live price’, constantly fluctuates, and is set electronically dependent on supply and demand figures taken from the gold futures markets. This live gold price is in a constant state of flux and high demand for gold during times of political or economic uncertainty increases the spot price.

It is extremely rare that a private investor will be able to buy precious metals at spot price. In order to cover costs when supplying gold bars or coins to an investor, for production, labour, delivery, and insurance, a gold premium will usually be added. This premium will vary dependent on the product, and it is always worth researching bullion dealers in order to buy your gold coins and bars at the best price. Atkinsons Bullion and Coins will always endeavour to sell our products at the most competitive premiums possible, and offer a ‘price match aim’ to ensure we will never knowingly be beaten on price by other authenticated sellers.

Live price charts

Live, up-to-date information on the gold price is extremely useful to those buying or selling within the bullion market. Not only can you check the current live price of gold, but historical charts can also sometimes be referred to in order to see an overall picture of the trends in the gold price against what may be have been happening in the world at that specific time. These charts can often be used as part of an informed decision when investing in physical gold.

Using our charting page, you are able to create your own gold price charts and save them to your account, so that you can always find the information that is most important to you. You can also create your own personal gold spot price alert, notifying you when the live gold price moves up or down.

If you would like any more information on the price of gold or silver, please feel free to call our friendly and knowledgeable team on 0121 355 0620, or send us an email to info@atkinsonsbullion.com.