Gold Price per Ounce: What is the Spot Price and How Much You Will Actually Pay for Your Gold
These HAA charts show the gold spot price in the USA and foreign markets both intraday and historically. They update in real time when markets are open.
To determine the gold price per ounce of the end product, a few factors must be considered. First, the gold spot price, as displayed in this chart, is the current market price for a raw ounce of unrefined gold bullion.
It’s not the final product.
Bullion must be refined into a gold bar or minted into a coin to be a good fit for investment. This process, in addition to the dealer markup, adds up to the gold price per ounce.
While the gold price per ounce and gold spot price will vary, the difference between the two will be consistent at most reputable dealers.
Second, during times of market weakness, the gold price per ounce relative to the gold spot price will often decrease as supply becomes more abundant. The opposite holds true during periods of market strength.
For example, in periods of low market volatility and average demand, a one ounce gold American Eagle coin might be offered at 4.5% over spot, but periods of weak demand can bring the price down to 3.5% over spot, or lower.
Beware of the Spread
Ignoring the bid-ask spread is a common mistake of novice gold investors.
For example, sovereign gold bullion coins are in most cases more expensive than bullion bars. However, they often sell for more when an investor wants to liquidate the investment. This is known as the “spread.” Many uneducated gold buyers fall prey to large bid-ask spreads, which often results in an immediate loss of 15–30%.
Metal dealers also often employ “loss-leader” strategies on initial purchases to gain new customers, but will adjust prices higher on subsequent purchases or recommend more expensive products like collectibles where the spread is much higher, resulting in greater profit for the dealer.
Knowledge of the product spread should always be obtained prior to making a purchase.
What Impacts the Gold Price
Investment demand via exchange traded products and derivatives impacts the gold price most. Demand and supply of physical gold has a smaller effect due to the size of the market.
Another driver of the gold price is interest rates. More specifically, it’s real interest rates. Real interest rates show what an investor will receive on a fixed income investment after taking inflation into account.
Since gold is a non-yield bearing investment low real interest environments generally provide an additional reason for investors to own it.
Lastly, since the gold spot price is quoted in US dollars, its direction will often move opposite to the dollar. If the dollar is weakening the gold price per ounce will often increase and vice-versa. Gold has proved to be a reliable store of value over the long term as dollars have lost purchasing power.