Gold has been considered throughout all times as a precious metal of high value. It has also become, for many analysts, investors, and experts, a refuge value for times of crisis, and above all, it has been considered an excellent, safe, and future-oriented investment option in times of economic indecision.
Gold is one of the most valuable raw materials in the world and is used to manufacture mobile phone components, jewelry, or even to measure the wealth of a country.
The gold market is complex, and that is why if we intend to invest in this raw material, it is important to know its background, its functioning, and its value. But at this point, how does the market for this precious metal work? How does its price vary? In what types and form can you acquire this metal? How is its price set?
How is the price of gold set?
To understand the process of setting the price of gold in the market, we will have to go back in time more than a hundred years. It was on September 12, 1919, in London, when the price of gold was officially set for the first time, specifically in the offices of NM Rothschild.
Currently, the process has changed as far as proper names are concerned, but the mechanism followed is practically identical. Exactly 104 years ago, the price of this precious metal depended directly on the Durham Gold Fixing Association, where five major bankers and members fixed the price of the metal up to twice a day and by telephone.
The first price was set at 10:30 in the morning and the second at 5:00 p.m. It was then that its president announced the price according to the market situation, and the members communicated it to their clients.
However, despite the change in organization, the process remains the same, with the price of gold being set in dollars twice a day, at 10:30 a.m. and later at 3:00 p.m., although the market price influences the decision. As with silver, the established price is influenced by mining, economic and political uncertainty, demand from sectors that work directly with the metal, such as jewelry stores, and interest rates.
The gold market figures today
The global gold market trades approximately $200 billion daily, although this figure can be much higher depending on the periods of greatest volume.
Currently, gold is already trading below $2,000 per ounce. During the first half of 2023, gold had risen 10%, skyrocketing at the beginning of May and reaching record figures, close to the $2,067 recorded in March last year.
Now, the forecast for the remainder of the year is that rates will rise again by 25 basis points in July and stop doing so later. However, market expectations evolve in line with the demand for safe-haven assets that vary depending on how the global economy evolves, depending on factors such as inflation, growth, and currency fluctuations.