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.
In this article
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. When central banks build up their gold reserves heavily, it 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. On the other hand, investment gold carries no VAT, so you are spared that extra cost.
When you buy you pay spot plus premium; when you sell you normally get a little below spot. That spread is normal for any physical asset. And if you sell at a gain, remember that it is taxed: see how much income tax (IRPF) you pay when you sell gold.
Is it a good time to buy?
Trying to time it exactly is very hard, even for professionals. So for an investor looking to preserve wealth, it usually makes more sense to think of gold as a long-term position than as a short-term bet. Before you go ahead, it is worth knowing how to buy physical gold without making mistakes.
At Equus Capital we help you buy physical metals in Valencia and explain the price, the premium and the tax clearly. 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.