Gold and gold derivatives is a popular investment and often utilized as a way of diversifying risk.
Gold is sometimes marketed as a supremely safe investment, but the market price of gold is definitely subject to volatility and speculation. A few examples of the many factors that can have an impact on the gold price – directly or indirectly – are quantitative easing measures, movements on the FX market, returns on the equity markets, and the oil price.
What´s the ISO code for gold?
The ISO 4217 currency code for gold i XAU.
The London gold fixing
The London gold fixing has been the most utilized benchmark for the gold price since 1919. In its current form, it is a twice-daily (on business days) telephone meeting of representatives from five bullion-trading firms of the London bullion market. On Christmas Eve and New Year´s Eve there is only one meeting per day.
The London gold fixing sets a price for settling contracts between members of the London bullion market. This price has a huge influence on the pricing of gold products throughout the world´s markets.
The very first London gold fixing was carried out on 12 September 1919 at 11:00 am by the five principal gold bullion traders and refiners of the day: N.M. Rothschild & Sons, Pixley & Abell, Sharps Wilkins, Mocatta & Goldsmid, and Samuel Montagu & Co.
The current participants of the London gold fixing are Goldman Sachs, JPMorgan Chase, Morgan Stanley, UBS, Barclays, Société Générale, Standard Chartered, Bank of China, Bank of Communications, HSBC Bank USA, ScotiaMocatta (Scotiabank), and the Toronto-Dominion Bank.
The intra-day spot price
Gold is traded continuously based on the intra-day spot price, which is derived from over-the-counter markets around the world. Learn more about trading gold.
Central banks, IMF & the gold price
Central banks and the International Monetary Fund have a large impact on the price of gold on the world´s markets. Central banks will usually not announce a gold purchase in advance, although they will sometimes express a general interest in growing their gold reserves.
Central banks don´t just impact the gold price by buying and selling gold; their interest rates can also change the gold price. Often, but not always, increasing interest rates correlate with decreasing prices for gold, and vice versa. There are however several notable examples of situations in recent history where this didn´t happen. When the European Central Bank increased its interest rate in April 2011 (for the first time since 2008) markets responded by increasing the gold price as well. Another example of from India in Augusti 2011, when the gold price peaked while the interest rate was at its highest in two years.
Owning physical gold
Investors who want to own actual physical gold rather than gold certificates and similar will typically purchase gold bullion coins or gold bars.
Golden coins created for investment purposes can be 24K since they do not need to cope with the wear and tear that normal coins used for everyday purchases are subjected to. It should be noted however that not all investor/collector coins are 24K. The famous American Gold Eagle, British gold sovereign and South African Krugerrand are for instance 22K. If you prefer a coin with higher gold content, you can purchase the special issue Canadian Gold Maple Leaf where the purity is 99.999 percent or the popular issue Canadian Gold Maple Leaf where the purity is 99.99 percent. Other options are the United States American Buffalo gold bullion, the Australian Gold Nugget bullion, the Australian Lunar Gold bullion, the Chinese Gold Panda bullion, and the Vienna Philharmonic gold bullion.