How the Gold Spot Price Is Set: LBMA Gold Price and the World Market
The gold price you see in the media or quoted by dealers worldwide doesn't arise by chance, and it isn't set by any single company. Behind the so-called spot price lies an elaborate mechanism of the global wholesale gold market – and its official reference point is the LBMA Gold Price, set twice a day. Here's how it all works.
What is the gold spot price
The spot price is the current market price for the immediate purchase or sale of gold, usually expressed in US dollars per troy ounce. Unlike futures contracts, it's a "here and now" price. Gold trades almost continuously on the over-the-counter (OTC) market between banks, refiners and dealers around the world – in London, Zurich, New York, Hong Kong and Shanghai – so the spot price changes throughout the day in near-continuous response to supply and demand.
LBMA Gold Price – a twice-daily auction
Amid this constant trading, the market still needs one official, transparent reference point – that's the role of the LBMA Gold Price. It's a benchmark gold price set through an electronic auction twice a day (at roughly 10:30 and 15:00 London time). Accredited banks and dealers enter the auction with volumes of buy and sell orders, and the system automatically finds the price at which supply and demand balance out. The resulting price is published in dollars, pounds and euros and becomes a reference point for contracts, derivatives and many market participants. The organisation and rules of the market are overseen by the London Bullion Market Association (LBMA).
History: from the telephone "fixing" to an electronic auction
The tradition of setting a daily gold price in London goes back to 1919, when five dealers would meet to jointly determine the price – the so-called London Gold Fixing. Historically, this was a legendary meeting in a room with a small flag on the table, whose raising signalled a pause in negotiations. In 2015, in response to calls for greater transparency and independent oversight of market benchmarks, the traditional fixing was replaced by today's electronic auction system, the LBMA Gold Price, which is independently administered and overseen by a benchmark administrator. A similar, once-daily auction mechanism applies to silver as the LBMA Silver Price.
What the benchmark is used for
The LBMA Gold Price isn't just a number for journalists. It serves as the reference price for physical trades between banks and refiners, for valuing inventories and mining company accounting, for settling derivatives and exchange contracts, and as the basis for pricing gold ETFs. Practically every precious metals dealer in the world – GOLDU included – bases its selling price on the current spot price, which is tied to this benchmark.
How this relates to the price at GOLDU
The price you see on a product at goldu.cz is based directly on the current world spot price and the koruna-to-dollar exchange rate – our system recalculates it automatically every three minutes so that it always reflects what's happening in the market. On top of the spot price comes a markup (premium) covering production, minting and distribution – how this varies by weight is explained in the article Premium on Gold: Why the Price per Gram Differs.
Frequently asked questions
Who sets the LBMA Gold Price?
The price is set through an electronic auction among accredited banks and dealers, twice a day, London time. The process is independently managed by a benchmark administrator, not by any single bank or dealer.
Is the spot price the same as the price I pay a dealer?
No. The spot price is the wholesale reference price for the metal itself. The final selling price adds a markup (premium) for production, minting, packaging and distribution.
Why does the gold price change even at night or on weekends?
Gold trades almost around the clock on markets worldwide (Asia, Europe and America overlap in trading hours), so the spot price can move even outside typical European business hours.
Conclusion
The gold price you follow every day isn't random or set unilaterally – it emerges from the global market and is anchored by the independently determined LBMA Gold Price benchmark. Understanding this mechanism helps explain why precious metal prices move and why they stay so consistent across the market. Browse our current range of investment gold and investment silver at GOLDU.
Disclaimer
This article is for informational and educational purposes only and does not constitute investment or tax advice. Precious metal prices fluctuate, and past performance is no guarantee of future returns. More in our Risk Disclosure document.
