How is The Price of Gold Determined?

Mar 10, 2023
loveGOLDᵀᴹ
2 minute read

For gold, it can be quite individual. To start, there is the London Bullion Market Association (LBMA) gold benchmark price as well as a spot price.

LBMA Price

The LBMA price is a very important reference price for the global bullion market and is a price that's used by participants from central and bullion banks to miners and fabricators.

The LBMA price is determined and set in London, UK by an independently administered auction process. The price is set twice daily (10:30 a.m. and 3 p.m. London time) and is quoted in US dollars per troy ounce.

More information about the LBMA price can be found here.

Spot Price

Separate is the spot price, which continually changes according to market dynamics based on what buyers and sellers are doing. It is largely influenced by institutional and large-scale investors.

As a retail investor, while being aware of the international price whether of the spot price or of the benchmark is important, it's also important to be aware of why the gold investment price that you're quoted might differ from that. A reason can be because of a bid-ask spread on the product, or it might also reflect the fact that there's a premium charged on your products.

For example, gold bullion bars and coins will have premiums attached to them to cover the cost to manufacture, design, store, and so on that will be added on top of the price of gold.

Royal Canadian Mint Gold Bars

For gold, it can be quite individual. To start, there is the London Bullion Market Association (LBMA) gold benchmark price as well as a spot price.

LBMA Price

The LBMA price is a very important reference price for the global bullion market and is a price that's used by participants from central and bullion banks to miners and fabricators.

More information about the LBMA price can be found here.

Spot Price

Separate is the spot price, which continually changes according to market dynamics based on what buyers and sellers are doing. It is largely influenced by institutional and large-scale investors.

For example, gold bullion bars and coins will have premiums attached to them to cover the cost to manufacture, design, store, and so on that will be added on top of the price of gold.

Insights provided by the World Gold Council

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