When people talk about the "gold price" they almost always mean the spot price: the international quote for gold for immediate delivery, which is set on the world markets and is normally expressed in dollars per ounce. It is the reference on which everything else is calculated.
What moves the gold price
Gold generates no interest and no dividends; its price depends on demand as a store of value. These are the factors that move it the most.
Interest rates
When rates fall, money in the bank earns little and gold gains appeal. When they rise, it competes less well. It is one of the strongest relationships in the gold market.
Inflation and the dollar
Gold is seen as protection against the loss of value of money. In periods of high inflation or a weak dollar, demand for gold tends to rise, as we explain when discussing gold against inflation.
Central banks
Their purchases and sales move enormous quantities. The strong accumulation of gold reserves by central banks is one of the signals that most shape the long-term price.
Uncertainty
Crises, wars or financial tensions drive up safe-haven demand. In moments of fear, gold tends to rise while other assets fall.
From the spot price to what you pay
The spot price is the reference, but when you buy physical gold you pay something more: the premium, which covers the manufacturing and distribution of bars and coins. That premium is higher on small pieces and lower on large bars, as we saw when comparing gold bars or coins. The good news is that investment gold carries no VAT, so there is no such extra cost.
When you buy you pay spot plus premium; when you sell you normally receive something below spot. That spread is normal in any physical asset. And if you sell at a gain, remember that it is taxed: review how much you pay on selling gold in personal income tax.
Is it a good time to buy?
Trying to pinpoint the exact moment is very hard even for professionals. That is why, for the investor who seeks to preserve wealth, it usually makes more sense to think of gold as a long-term position rather than a short-term bet. Before taking the step, it is worth knowing how to buy physical gold without making mistakes.
At Equus Capital we advise on the purchase of physical metals in Valencia with full transparency on price, premium and taxation. First consultation free and with no obligation.
Frequently asked questions
Why does the gold price rise?
Because its demand as a store of value rises. The main drivers are falling interest rates, inflation, a weak dollar, purchases by central banks and economic or geopolitical uncertainty.
What is the spot price of gold?
It is the international quote for gold for immediate delivery, set on the world markets and normally expressed in dollars per ounce. It is the reference on which the price of bars and coins is calculated.
Why do I pay more than the gold price when buying physical?
Because the premium is added to the spot price, covering the manufacturing and distribution of the piece. It is higher on coins and small bars and lower on large bars. Investment gold, however, carries no VAT.
Is it a good time to buy gold?
Pinpointing the exact moment is very hard. To preserve wealth it usually makes more sense to see gold as a long-term position rather than a short-term bet, buying with judgement and without being swayed by headlines.