How the Gold Price Is Determined
There is no single official gold price. The global price emerges from continuous trading in the London over-the-counter market and COMEX futures in New York, anchored twice a day by the LBMA Gold Price auction run by ICE Benchmark Administration. Every retail rate, from a Dubai souk to a Chennai showroom, is that US-dollar price converted by weight, purity and currency, plus local duty, tax and margin.
The four places price discovery happens
| Market | What trades | Role in the price |
|---|---|---|
| London OTC market | Physical gold held "loco London", in 400-oz Good Delivery bars | The largest physical market by value; the reference for spot |
| LBMA Gold Price auction | Electronic auction at 10:30 and 15:00 London time | Benchmark used in contracts, central bank valuations and fund pricing |
| COMEX (CME Group) | GC futures, 100 troy oz per contract | Most active futures market; leads intraday moves |
| Shanghai Gold Exchange | Physical gold in yuan | Reflects Chinese demand; often trades at a premium or discount to London |
London: the over-the-counter market
Most physical gold changes hands bilaterally between banks, refiners, dealers and funds in London rather than on an exchange. Trades are for gold "loco London", meaning metal held in London vaults, and the standard unit is the Good Delivery bar, roughly 400 troy ounces at a minimum fineness of 995. Because these trades are private, there is no single tape; the "spot price" you see quoted as XAU/USD is a composite of dealer bid and ask prices in this market, updated every few seconds while it is open.
The LBMA Gold Price auction
Twice each London business day, at 10:30 and 15:00, ICE Benchmark Administration (IBA) runs an electronic auction. Accredited participants enter buy and sell orders at an opening price; if buying and selling volumes do not balance within a set tolerance, the price is adjusted and a new round begins. When the imbalance is small enough, the price is fixed and published in US dollars per troy ounce. This auction replaced the old telephone-based London gold fixing in 2015. The LBMA price is not a live quote; it is a reference point that contracts, refiners, central banks and some ETFs use for valuation and settlement.
COMEX futures
The GC contract on COMEX represents 100 troy ounces for delivery in a future month. Futures trade almost around the clock on CME Globex, so large buyers and sellers, including hedge funds and commodity trading advisers, often act there first. Arbitrage between futures and London spot keeps the two closely aligned; the gap between them mainly reflects interest rates and storage costs to the delivery month. Follow the contract on our gold futures page.
Shanghai and other regional markets
The Shanghai Gold Exchange publishes a yuan-denominated benchmark and handles much of China's physical trade. Because China restricts gold imports and capital flows, the Shanghai price can sit above or below London parity for weeks. India's MCX futures, priced in rupees, play a similar local role; they track international prices plus the import duty and rupee moves.
What moves the price
- The US dollar. Gold is priced in dollars, so a weaker dollar makes it cheaper for holders of other currencies and tends to push the dollar price up, and the reverse. The relationship is strong over time but not mechanical day to day.
- Real interest rates. Gold pays no interest. When inflation-adjusted bond yields fall, the cost of holding gold falls and demand tends to rise.
- Central bank buying. Official sector purchases have been a large source of demand in recent years. See central banks and gold.
- Investment flows. ETF holdings, futures positioning and bar and coin demand can swing quickly with risk sentiment.
- Jewellery and physical demand. India and China are the largest consumer markets; strong local demand shows up as premiums, weak demand as discounts.
For a day-by-day view, read why the gold price changes daily.
From the global price to your local rate
Every retail price is built from the same five steps. Here is an illustrative calculation for India, assuming spot gold at US$4,150 per troy ounce and US$1 = ₹94.50 (figures rounded at each step):
| Step | Calculation | Result |
|---|---|---|
| 1. Ounce to gram | $4,150 ÷ 31.1035 g | $133.43/g |
| 2. Dollar to rupee | $133.43 × 94.50 | ₹12,609/g |
| 3. Add 6% import duty | ₹12,609 × 1.06 | ₹13,366/g (24K) |
| 4. Adjust for purity | ₹13,366 × 0.916 | ₹12,243/g (22K) |
| 5. Add 3% GST (10 g, no making) | ₹1,22,430 × 1.03 | ₹1,26,103 |
Making charges come on top for jewellery (see making charges explained), and a dealer's premium or discount sits between steps 3 and 4. In countries without import duty, such as the UAE for investment gold, step 3 disappears. The gold calculator runs these steps with the live price, and the spot gold price page shows the starting figure.
The spot price is a wholesale price for large bars. Small bars and coins carry a premium for fabrication and distribution, and dealers buy back below spot. Nobody retail pays exactly spot.