The price of gold today, as of 9:08 am, was £1,564.13 an ounce. That’s 0.26% lower than yesterday’s closing price of £1,568.19.
Compared to last week, the price of gold is down 0.82% and 4.14% lower than a month ago.
The highest gold price in 52 weeks is £1,633.43, while the lowest gold price in 52 weeks is £1,564.82.
Investing in a commodity such as gold, or investing in a stock exchange fund, is inherently risky and puts your capital at risk. You may not get part or all of your money back.
Gold prices today
Gold price over time
How to invest in gold
Many investors view gold as the ultimate safe haven. When the prices of stocks, bonds and real estate fall sharply, gold can hold its value – and the price can even rise as nervous investors rush to buy.
Investing in gold is also a way to add diversification to your investment portfolio. When you hold a diversified mix of different assets, including gold, variable returns can protect the value of your investments.
There are different ways to invest in gold. Each has pros and cons…
One option is to buy gold in physical form:
Gold bars. Gold bars, also known as bullion, are a popular choice for buying gold. Bullion is usually sold by the gram or ounce. Purity, manufacturer and weight must be stamped on the front of the bar.Gold coins. The Sovereign and Britannia are popular collectibles that command a higher price than what you would get for the same amount of gold in the form of bullion.Gold jewelry. As with gold coins, you’re likely to pay extra for gold if you buy it in the form of jewelry – a premium that can range from 20% to 300% depending on the manufacturer.
Alternatively, investors can invest in gold indirectly:
Gold shares. Buying the shares of gold mining or processing companies is another way to invest in the yellow metal. You don’t get physical gold, but you do get exposure to the rise and fall of the price of gold in the market.Gold funds. There are several funds that offer exposure to gold. They can invest in gold stocks, or they can trade gold derivatives on the options and futures markets.
Should you invest in gold?
Consider investing in gold if you want to hedge against risk or diversify your portfolio. Gold probably wouldn’t be your first choice for long term capital growth.
Over the past five years, the price of gold has risen about 36%, while the total return of the S&P 500 was 60%.
Gold prices can be extremely volatile, which means gold is not a completely stable investment. You can even easily build a well-diversified investment portfolio without gold.
It should also be noted that gold in its physical form, unlike other investments, does not generate income or returns.
If you’re buying physical gold, you should also consider where you’re going to keep it and whether there are any costs associated with safe storage.
Is Gold an Inflation Hedge?
Studies have shown that gold can be an effective way to protect your wealth against inflation, but only over extremely long periods of time, measured in decades or even centuries.
Over shorter time periods, the inflation-adjusted price of gold fluctuates dramatically, making it a poor hedge for inflation in the short term.
Frequently Asked Questions (FAQs)
Is buying gold better than holding cash?
Inflation lowers the “true” value of a currency over time. In other words, for £50 you are buying less today than you were 10 years ago. However, gold can be a way to protect the ‘true’ value of your assets against inflation.
During a period of high inflation, as is currently the case in the UK and US, investors can fall back on buying gold as a real physical asset that will hold its value. Periods of high inflation are often accompanied by a rise in interest rates and general economic uncertainty. Because of this, gold is seen as a safe haven and increased demand theoretically leads to an increase in price.
According to the Office for National Statistics, annual inflation in the UK has averaged 3% over the last 20 years. During the same period, the price of gold has increased by an average of 9% per year (according to the World Gold Council). While the average base rate (a proxy for savings rates) over this period was 3%, according to the Bank of England.
Adjusted for inflation of 3%, the ‘real’ value of gold has therefore increased by an average of 6% per year. In comparison, savers would not have experienced a ‘real’ increase in the value of cash in savings accounts due to the influence of inflation.
Is it a good time to buy gold?
Gold can provide a safe haven for investors in times of economic and geopolitical volatility. It also provides a way to preserve wealth in a high inflation environment. Like stocks, the price of gold is volatile. However, it has seen an increase in value over the last 30 years.
Investors should also consider the effect of exchange rate fluctuations when deciding whether or not to buy gold. Gold is usually denominated in US dollars and therefore tends to have an inverse relationship to the US dollar. This means that if the US dollar strengthens against other currencies, the price of gold may fall.
Looking at the past year, the price of gold in US dollars has fallen by 3% as the US dollar has strengthened against other currencies. However, the price of gold in sterling has risen by 10% due to the weakening of the pound against the dollar.
In general, it is difficult to judge whether it is a good time to buy gold, as the price depends on a number of factors. While a continuation of the current level of economic and political uncertainty could be a tailwind for gold prices, investors should also be aware of this asset’s volatility.
Is gold falling in value?
Gold is a limited commodity with a relatively static supply, which means that the price of gold is highly sensitive to changes in demand. A decrease in demand will therefore result in a decrease in the value of gold.
For example, the price of gold fell by more than 25% between 2011 and 2013. It also fell from more than $2,000 per Troy ounce in mid-2020 to less than $1,700 in early 2021, a 17% decline.
How is the gold price determined?
The price of gold is determined by the level of supply and demand. The daily price is set by the London Bullion Market Association (LBMA) and there are two different types of gold prices:
Fixed: LBMA members meet twice a day via conference call to agree on a price to settle their outstanding client orders. This is usually used for larger gold orders.
Place: this is a ‘live’ price largely used for buying and selling gold bullion.
Is it profitable to invest in digital gold?
Digital gold (or digigold) is a form of digital currency that allows you to purchase fractions of physical gold stored by the seller. Buyers of digital gold will own and hold legal title to the gold, with the seller acting as a custodian.
Digital gold allows buyers to invest by value – say £25 – rather than by weight (as with a 1-kilogram gold bar). Buyers can also invest a lower minimum amount than with the physical asset.
Digital gold also offers storage and insurance savings. For example, the Royal Mint charges an annual management fee of 0.5% for its DigiGold products, compared to 1-2% for physical gold.
Since buyers own the underlying physical gold, their profit (or loss) will depend on the price of gold, as covered in the questions above.
Which form of gold is best for investing?
You can buy physical gold in the form of bullion, coins or jewelry, or invest in digital gold:
Bullion bars: these usually range in weight from one gram to over 10 kilograms. A premium is usually charged over the ‘spot price’ of the gold to cover production costs. The cheapest option currently being sold by the Royal Mint is the Britannia bullion bar of one gram of 999.99 fine gold, with a retail price of £70
Coins: these are available in lower weights than bullion bars. The main gold coins in the United Kingdom are the Sovereign and Britannia. The Royal Mint currently charges £122 for a 916.67 Fine Gold Quarter Sovereign 2022. Both coins are legal tender in the UK and as such are free of capital gains tax and VAT for UK residents
Jewellery: jewelry, especially antique pieces, is another option. However, you may pay a surcharge of at least 20%, and often much higher, compared to the gold content. This covers the labor costs of the design and manufacture and the retail margin
Digital Gold: this allows you to buy and hold fractions of the physical assets, with lower minimum investment amounts and savings on storage and insurance costs.
Investors may also consider investing in an indirect form of gold, including:
Buying shares of companies that mine, refine and trade gold: While mining company stock prices correlate with gold prices, their stock prices are also affected by other factors
Buy gold and commodity funds: Specialized commodities, mining, and exchange-traded funds can provide investors with exposure to gold, without the difficulties of trading and storing it in physical form.
*The gold price data above comes from Zyla Labs, which pulls asset price data from a wide variety of sources. This gold price represents an average of spot gold prices on several leading metal exchanges. Prices are updated every working day.