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Spot price and the troy ounce
Gold is priced per troy ounce, which is heavier than a regular ounce. Learn what the spot price is, where it comes from, how the LBMA benchmark works and how to convert between ounces, grams and kilograms.
This page is general education, not financial or investment advice. Prices change constantly. Talk to a licensed professional before buying or selling.
The troy ounce
Gold, silver, platinum and palladium are weighed in troy ounces, a unit that dates back to medieval trade. A troy ounce is heavier than the everyday (avoirdupois) ounce used for food in the United States.
| Unit | Grams |
|---|---|
| 1 troy ounce (ozt) | 31.1035 g |
| 1 avoirdupois ounce (oz) | 28.3495 g |
| 1 kilogram | 32.15 troy ounces |
| 1 tola (used in South Asia) | About 11.66 g |
| 1 tael (used in parts of East Asia) | Varies by market; about 37.4 g in Hong Kong and 37.5 g in Taiwan |
So a "1 ounce" gold coin contains about 31.1 grams of gold, roughly 10 percent more than a kitchen ounce. When someone quotes a gold price "per ounce," they always mean per troy ounce.
There are 12 troy ounces in a troy pound, not 16, which is another source of confusion.
What the spot price is
The spot price is the current market price for gold traded for immediate delivery in large, wholesale amounts. It is quoted continuously during trading hours and moves from second to second.
Spot prices you see online are usually derived from two big markets:
- The London over-the-counter market, where banks and dealers trade large amounts of physical gold directly with each other.
- Futures exchanges, especially COMEX in New York, where contracts for future delivery are traded. The most actively traded futures contract strongly influences the quoted spot price.
Prices are also set in Shanghai, Dubai, Mumbai and other hubs, with small differences between them.
The LBMA Gold Price
The LBMA Gold Price is an important benchmark set twice each London business day, in the morning and afternoon, through an electronic auction administered by ICE Benchmark Administration. Participating banks submit buy and sell orders until supply and demand balance. Central banks, refiners, miners and contracts around the world use this benchmark for pricing. It replaced the historic "London gold fix," which dated back to 1919.
Why you cannot buy at spot
Spot is a wholesale price for large bars. Retail buyers pay more because of fabrication, distribution, dealer costs and profit. Dealers also buy back below their selling price. See bid, ask and premiums.
Calculating the gold value of an item
To estimate the melt value of a piece of gold:
melt value = weight in grams x purity x (spot price per troy ounce / 31.1035)
Example: a 10-gram ring stamped 14K (58.3 percent gold), with gold at an assumed price of 2,000 dollars per ounce:
- Price per gram of pure gold: 2,000 / 31.1035 = about 64.30 dollars.
- Gold content: 10 x 0.583 = 5.83 grams.
- Melt value: 5.83 x 64.30 = about 375 dollars.
This is the raw metal value. A buyer will usually pay less to cover refining and profit. See karats explained.
Currencies
The benchmark spot price is quoted in US dollars, but gold is priced in every currency. When the dollar weakens, the dollar price of gold may rise even if gold's value in other currencies is unchanged. See what moves the gold price.
Spot price checklist
- Always confirm the unit: troy ounce, gram or kilogram.
- Check the currency.
- Note the time; prices move constantly.
- Remember that retail prices include premiums.