Today’s gold price of $2,617.65 per troy ounce is down by 1.05% from the price of $2,645.41 one week ago. Read more on gold price analysis, comparisons, and historical data below.
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Below we explain some of the biggest influences responsible for the movements of gold prices. We also cover the main units used to weigh gold, like grams, ounces, and other international measurements.
Contents
Read on to find out why gold is still the most popular precious metal, what moves gold’s price, why its value is mostly quoted in US dollars, and ways you can trade this commodity.
What Moves Gold Prices?
When you ask people about what the main factors are that move gold prices, you’ll get a broad range of answers. However, there are two foundational pillars you need to understand to get a grasp of gold’s role in the economy.
- Environmental and Technological: Since gold is a natural resource found within rocky formations, accessable supply is limited. Gold takes a long time to form, and we still don’t exactly know how it comes into existence. What we do know, is that with the advancement of various mining technologies, we keep extracting gold, and the amount of “new” gold that comes to the market is determined by:
- The amount of gold we’re able to extract from natural rocky formations;
- The mining technology at our disposal to do extract gold.
- Economic: After gold is mined and processed, there is another factor to understand before it comes to the open consumer market. If all newly supplied gold was released for consumers to buy, there would be too much gold, and the value would plummet. Much of the stock-control of gold is determined by socio-political factors. So, the amount of gold released to retail and commercial markets is decided by the governing bodies that hold regulatory authority over the gold market.
Environmental Threats to Gold Prices
When we talk of environmental factors affecting gold prices, we can look at directly observable phenomena, like the weather. Earthquakes are perhaps the greatest threat to gold mines and extraction operations and they can hinder the expected gold output.
Hurricanes, tornadoes, tsunamis, or even wildfires can be a threat, although as technology advances, gold mining operators plan and execute craftier precautions. In any case, when such extreme upheavals of the natural environment come about, gold prices tend to move along with them.
Supply and Demand of Gold on Prices
It may come as a surprise that gold, like many other markets, has controlled supply and demand. This was once a well-kept secret, though, in recent years, more of us have come to learn that not all mined and refined gold is released to the open market.
In 1999, many European central banks signed the Central Bank Gold Agreement (CBGA), one that limits the amount of gold that can be sold each year. More such agreements have been signed since.
In terms of gold sitting in vaults, nations like the US, Germany, Switzerland, and India have some of the largest gold reserves in the world.
There are two main drivers of commercial market influence on gold prices:
- Fashion: Gold is primarily a fashion emblem and has been for a long time. The metal’s use in various fashion, jewellery and other consumer industries obviously impact gold prices.
- Practicality: As it happens, gold is a great electric conductor and is used in computing hardware. You will probably find tiny bits of gold on exceptionally high-quality computers. Gold is also used to apply a thin coating to spacesuit visors to protect astronauts from excessive solar exposure. The same is done for satellites, so there’s certainly increasing practical demand for gold on this front.
Product prices in markets that rely on high gold supplies are some of the most impacted by volatility in the gold market. Gold opened 2021 with a price of $1827.49 per troy ounce. In comparison, today’s gold price of $2,617.65 (+44.32%) may also reflect in product price fluctuations of markets heavily dependent on gold supplies.
Central Bank Policies Affecting Gold
The actions of central banks can have a big impact on gold prices in two ways.
First, central banks make decisions to contract or grow the money supply in their countries. These decisions ultimately drive an increase in gold trading since fiat currencies (eg, US dollar and euro) compete with gold as a store of value and a form of money.
Second, central banks hold large gold reserves. For example, the New York Federal Reserve Vault holds over 6,000 tons of gold — over 3% of all the gold in the world and more than a third more than Fort Knox.
As a result, their decision to accumulate or sell reserves can move the gold market.
Demand for Gold Financial Instruments
Trading instruments such as exchange-traded funds (ETFs) represent an increasingly important segment of gold trading.
Most gold ETFs purchase physical gold and store it for their traders, although some ETFs trade in gold futures, options, or other gold derivative products.
Demand for these instruments can impact gold prices.
How Is Gold Weighed?
Typically, we’re used to seeing gold weighed in grams (g) or ounces (oz).
One ounce is approximately 28 grams. The average retail consumer is unlikely to buy a kilogram of gold, and so the main weight units to track gold prices are grams and ounces.
That said, there are many other units used to weigh gold and showcase gold prices:
- Troy Ounce (t oz): Mostly used to measure gold bullion. You can see examples of “t oz” gold prices with some of the bullion dealers listed below. One “t oz” is equal to 31.1034768 grams.
- Kilogram (kg): One kilogram is equal to 1,000 grams. This unit is also used fairly widely, especially among commercial and larger volume retail markets.
- Tonne (t): The most common places to hear of literal “tonnes” of gold are in the news, financial papers, or adventure and gangster stories. Still, gold can be measured in tonnes. (Note: a tonne is equal to 1,000 kg).
- Tael (in traditional Chinese: 兩): A Chinese unit of measurement, now standardized to 50g. However, you can see different taels used to measure precious metals around the world. For example, some consumers may be able to find 37.5g gold taels, a type of bullion.
- Tola (in Hindi: तोला): Used by ancient Indian and other South Asian cultures to measure gold. The tola as a measurement unit is now standardized to 3/8th of a troy ounce, about 11.66 grams.
How gold is weighed depends on the size of the sub-market, the typical transaction volume, and the country of origin. Gold prices are presented in many currencies and weight units, but the most typical units are ounces, troy ounces, or grams.
Why Is Gold Usually Quoted in USD?
From the mid-to-late 1800s, countries like the US abided by an international monetary system named the “gold standard.” This meant that each unit of a given currency was defined by a specific weight of gold. The US dollar became the world reserve currency in 1944, and so gold prices have mostly been quoted in USD ever since.
The gold standard system lived on-and-off until the 1970s.
Well before the gold standard system was introduced to value fiat currencies, gold was already a trade currency in many parts of the world, with South Asia being the center of gold trade. The gold standard was actually preceded by the silver standard, back when silver coins were still an everyday currency.
Great Britain was the main driving force behind the global adaptation of the gold standard. It is said that Sir Isaac Newton, a former member of the Royal Mint, contributed to forcing silver coins out of circulation by setting unrealistically low silver-to-gold exchange rates.
With the combined impact of the gold standard and the Breton Woods system, gold prices are still mostly quoted in USD. However, many gold bullion dealers list gold in several international currencies.
Gold Bullion Dealers
Bullion dealers are perhaps the fastest and lowest-risk way to put money into gold.
If today’s gold prices made you decide that it’s time to buy, here are some reputable gold bullion dealers available in :
How To Set Google Alerts For Gold Price News
Save time researching gold with our easy step-by-step guide to getting breaking news delivered right to you with a Google Alert.
- Go to Google Alerts.
- Type “gold prices” in the search box.
- Choose how often you’d like to receive alert emails: as it happens; once a day; once a week.
- Choose the sources you want Google to search (eg, Blogs, Finance, News).
- Choose the language of the content you want to search through.
- Choose the country of the content’s origin.
- Choose how many results to have delivered: all results; only the best results, based on Google’s algorithms.
- Enter the email address where you want to receive your alerts.
Learn More About Gold
Interested in learning more about gold? We have a handful of guides and articles that can teach you about gold as a metal and commodity, as well as other aspects of this fascinating metal:
- Gold As A Commodity: A guide on what makes gold so valuable — a little more detailed than what we’ve covered on gold’s value in this guide.
- How To Trade Gold: An in-depth look at different trading instruments and third-party services you can use to speculate on gold prices.
- Bullion Dealer Guide: A guide on how bullion dealers work and how to choose one when buying gold.
- Gold vs Stocks vs Real Estate: An exploration of gold compared as a store of value to stocks and property.
- Gold IRAs: A article on why people may consider purchasing gold IRAs, covering both the advantages and potential pitfalls.
See our economic overview of these top gold trading countries — these nations have a significant impact on gold prices:
- United Arab Emirates: 6th largest gold exporter
- Turkey: Over $300bn worth of gold exported each year
- Switzerland: One of the world’s top 10 gold reserves
- Hong Kong: 5th largest importare of gold
- Canada: 7th largest gold exporter.
You can find live prices and guides for other metal commodities here:
FAQs
How does inflation affect gold prices?
While there is no single trend that can define fiat money inflation’s relationship to gold prices, the shiny metal’s value tends to rise as the value of the comparable currency, like USD, EUR, or GBP, falls. This is because gold is often used as a hedge against inflation.
Who controls gold prices?
Gold prices are controlled by the organizations that have the authority to regulate the supply and demand of gold’s two consumer markets — commercial and retail. The individuals heading up organizations like the World Gold Council, as well as large private and public gold-related firms are of great influence on gold prices.
Do gold prices go up during a recession?
Gold prices may go up or fall during a recession. Typically, gold prices will either fall at a lesser rate than economic inflation or rise as investors who consider gold a safe haven pour money into the commodity. For example, gold prices began to rise two years before the 2008 recession — prices hiked from $596.00 per troy ounce from October 16th, 2006 to $973.15 on March 10th, 2008.
Why did gold prices go up in 2019?
Gold prices were mostly steady between July 2013 ($1,253.30 per troy ounce) and May 2019 ($1,276.35 per troy ounce). However, when news of a global pandemic spread across the globe, many retail, as well as commercial speculators, transferred value into gold in fear of an economic collapse. This led to an increase in gold prices to $1,976.70 by August 2020, after which the precious metal’s cost went into a steadier correction.
Why did gold prices fall in 2013?
Gold prices saw one of the largest drops in 2013 when speculators expected a long-running gold price support to break as a result of several factors, one being the assumption that the US Federal Reserve will cut bond purchases. At one point during 2013, the price of gold dropped from $1,573.70 per troy ounce on April 8th to $1,353.25 in just one week.
Why did gold prices spike in 1980?
Following a worldwide spike in oil supplies, and as a result, global energy inflation, gold prices peaked in January 1980 at $835.00 before tumbling again to lows of $303.75 by August 1982. The reason for the sudden inflow of money into gold was mostly panic buying.
