Where the price comes from
Gold is traded around the clock in London, New York, Shanghai and other markets, and its benchmark price is quoted in US dollars per troy ounce. The price you pay in Britain is that dollar price converted into pounds, plus a premium for the coin.
The US dollar
Because gold is priced in dollars, a weaker dollar tends to make gold cheaper for buyers using other currencies, which can lift demand and the price. A stronger dollar tends to do the opposite.
The pound, for British buyers
There is a second currency effect for anyone buying in the UK. If the pound weakens against the dollar, gold costs more in pounds even if the dollar price has not moved. That is why the sterling price of gold can rise on a day the headline dollar price falls, and the other way round.
Interest rates
Gold pays no interest. When savings accounts and bonds pay well, particularly after inflation, holding gold has a higher opportunity cost, and demand can soften. When real interest rates are low or negative, gold looks relatively more attractive.
Inflation and uncertainty
Many buyers turn to gold as a store of value when they worry about inflation, financial instability or geopolitical conflict. Periods of stress often see rising demand for physical gold, which is why it is sometimes described as a safe haven.
Central banks
Central banks have been among the largest buyers of gold in recent years, which has been a steady source of demand. See why central banks keep buying gold.
Investment demand
Money flowing into and out of gold backed exchange traded funds, and demand for bars and coins, can move the price noticeably, especially when large investors change their view quickly.
Jewellery and industry
A large share of gold demand comes from jewellery, with China and India the biggest markets. That demand tends to fall when prices are high and rise when they dip, which can soften price swings. Industrial use, mainly electronics, is a smaller but steady part.
Supply
Mines produce roughly 3,600 tonnes of gold a year, and recycling adds well over a thousand tonnes more. Mine supply cannot respond quickly to higher prices, because new mines take many years to develop. More in why finding new gold is getting harder.
What this means for you
Nobody can reliably predict short term moves in the gold price. People who do well with gold tend to buy for the long term, spread purchases over time, and avoid decisions driven by a single day’s headlines. We confirm your price before you pay, so you always know exactly what you are buying at.
Questions people ask
Why is gold priced in dollars?
The global benchmark is set in US dollars per troy ounce. UK prices are converted into pounds.
Why did gold rise in pounds when it fell in dollars?
The pound weakened against the dollar, so each dollar of gold cost more in pounds.
Can anyone predict the gold price?
Not reliably in the short term.
This article is general information, not financial, investment or tax advice. The value of precious metals can go down as well as up.
