If you have ever looked up the gold price one day and found it different the next, you are not imagining things. Gold trades around the clock on global markets, and its price moves constantly. Understanding how that price is set, and why what you are offered for a second-hand ring is lower than the headline figure, can help you make a calm, informed decision. This guide explains the basics in plain terms. It is general information, not financial advice.
The global spot price per troy ounce
The number quoted in the news is the spot price: the going rate to buy or sell gold for near-immediate delivery on the international market. It is quoted per troy ounce, an old unit used specifically for precious metals. A troy ounce is about 31.1 grams, which is a little heavier than the ordinary (avoirdupois) ounce you might use in the kitchen. Most gold worldwide is priced in US dollars per troy ounce, because dollars are the standard currency for international commodities.
There is also a widely used reference figure known as the LBMA Gold Price, set twice each day in London, in the morning and the afternoon. It gives the market a recognised benchmark, but trading carries on continuously around it, so the live spot price drifts up and down throughout the day.
Why it is quoted for pure gold
Spot price refers to pure (fine) gold, sometimes described as 999 or 24 carat. Most jewellery is not pure: 9 carat is 37.5% gold, 18 carat is 75% gold, and so on. So the spot price is a starting reference point for the metal content, not the value of a finished item. We will come back to that distinction below.
Why the price changes every day
Gold has no single fixed value; its price reflects the balance of supply and demand from buyers and sellers all over the world, every minute the market is open. Several broad factors tend to influence it:
- Interest rates and central bank policy. Gold pays no interest, so when returns on savings and bonds are high, some investors find gold less attractive, and vice versa.
- Inflation and economic uncertainty. Gold is often viewed as a store of value, so demand can rise when people feel nervous about the wider economy.
- The strength of the US dollar. Because gold is priced in dollars, a stronger dollar can push the dollar price down, and a weaker dollar can push it up.
- Central bank buying, mining output and recycling. These affect the underlying supply of and demand for the physical metal.
No one can reliably predict short-term moves, and you should treat any forecast with healthy caution. The practical takeaway is simply that the price you see is a snapshot of a moving market.
How the GBP/USD exchange rate affects UK prices
Here is a point that surprises many people in the UK: even if the dollar gold price stays still, the price in pounds can change, because gold is priced in dollars and you are paid in sterling.
To get a UK figure, the dollar price is effectively converted using the GBP/USD exchange rate. If the pound weakens against the dollar, it takes more pounds to buy the same dollar-priced gold, so the sterling price rises. If the pound strengthens, the sterling price tends to fall. In practice, the UK gold price moves with two things at once: the global dollar price and the exchange rate. That is one more reason the figure shifts from day to day.
Spot price versus what a buyer actually pays
This is the part worth understanding clearly. The spot price is a wholesale reference for large quantities of pure metal. A reputable buyer of second-hand gold will pay a proportion of that value, and there are honest, practical reasons why it is not the full spot figure:
- Purity and weight. Payment is based on the actual weight of pure gold in your item. A 9 carat chain contains far less gold than its total weight suggests, because the rest is other metals.
- Refining and processing costs. Second-hand gold usually has to be assayed (tested), melted and refined back to a usable standard. That work has a real cost.
- A margin for the business. Like any business, a buyer needs to cover overheads, insurance, secure handling and a reasonable profit. This margin is normal and not a sign of a poor deal.
- Price movement and handling risk. Because the market moves, buyers build in a small allowance for the time between purchasing your gold and processing it.
So the amount offered depends on the item's carat, its weight, the live market price on the day and the buyer's costs. A fair offer will be a transparent, sensible percentage of the metal's value, clearly explained. It will never be the full spot price, and any claim to pay "100% of spot" for second-hand items is worth questioning.
How to sanity-check an offer
You do not need to be an expert to feel confident. A few habits help: know your items' approximate carat (often hallmarked), check the live gold price on a reputable source on the day, ask the buyer to explain how they reached their figure, and compare more than one offer. A trustworthy buyer will be happy to walk you through the calculation rather than rush you.
A calm summary
The gold price is a live, global, dollar-denominated figure per troy ounce that moves with markets and the GBP/USD exchange rate. What you are paid for second-hand gold reflects the pure metal it contains, minus the real costs of refining and a fair business margin. There is no hype here, just arithmetic and an honest market.
If you would like, there, you are always welcome to request a free, no-obligation valuation so you can see how those figures apply to your own pieces before deciding anything.