The price of gold was £1,912.28 per ounce at 9:10 a.m. today, up 0.40% from yesterday’s closing price of £1,904.61.
Compared to last week, the price of gold increased by 0.20%, and compared to the previous month, it increased by 3.59%.
The 52-week high price for gold is £1,920.69 while the 52-week low price for gold is £1,821.23.
Gold prices today
Gold price over time
How to invest in gold
Some investors view gold as a safe haven, relying on the theory that gold – as an uncorrelated asset – will retain its value when stock, bond and real estate prices fall sharply, and that the price might even rise if nervous investors rush in and buy gold.
Investing in gold also allows you to diversify your investment portfolio. By holding a diversified mix of different assets, including gold, varying returns can help protect the overall value of your investments.
There are several options for investors who want to invest in gold. Each has its advantages and disadvantages…
One possibility, for example, is to buy gold in physical form:
- Gold bars. Gold bars, also known as bullion, are a popular choice for buying gold. Gold bullion is usually sold in grams or ounces. The purity, manufacturer and weight should be stamped on the front of the bar.
- Gold coins. The Sovereign and Britannia are popular collector’s items that command a premium over what you would get for the same amount of gold in bullion.
- Gold jewelry. As with gold coins, you’ll likely pay a premium when you buy gold in the form of jewelry—a premium that can range from 20% to 300%, depending on the manufacturer.
Alternatively, investors have the option of investing indirectly in gold:
- Gold stocks. Buying shares in gold mining or gold processing companies is another way to invest in the yellow metal. Although you don’t own physical gold, you are affected by the rise and fall of the price of gold in the market.
- Gold funds. There are a number of funds that allow gold investments. You can invest in gold stocks or trade gold derivatives on the options and futures markets.
Should you invest in gold?
You might consider investing in gold if you want to hedge against risk or diversify an investment portfolio that already contains other assets such as stocks, bonds and cash. Gold would probably not be your first choice if you are looking to achieve long-term capital growth.
The chart above shows how the price of gold has performed over the past five years. Remember that past performance is no guarantee of future returns
The price of gold can be extremely volatile, which means that gold is not a completely stable investment. In fact, you can easily build a well-diversified investment portfolio without any gold at all.
It should also be noted that, unlike other investments, gold in physical form does not generate any income or returns.
When purchasing physical gold, you also need to consider where you want to store it and whether there are any costs associated with safe storage.
Is gold a protection against inflation?
Studies have found that gold can be an effective way to protect your wealth from inflation, but only over extremely long periods of time, measured in decades or even centuries. A 2022 Wisdom Tree insight paper on gold investment opportunities described the precious metal as “an excellent store of value.”
Over shorter periods of time, the inflation-adjusted price of gold fluctuates considerably, which is why it is generally not a good short-term hedge against inflation.
Frequently Asked Questions (FAQs)
Is buying gold better than keeping cash?
Inflation reduces the “real” value of a currency over time. In other words, £50 buys you less today than it did 10 years ago. However, gold can be a way to protect the “real” value of your wealth from inflation.
In times of high inflation, some investors may turn to gold again, viewing it as a real, stable asset.
Periods of high inflation are often accompanied by rising interest rates and general economic uncertainty. This is why gold is seen by some as a safe haven and increased demand theoretically leads to a rise in price.
Over the past 20 years, annual inflation in the UK has averaged 3%, according to the Office for National Statistics. Over the same period, the price of gold has risen by an average of 9% per year, according to the World Gold Council. The average base rate (an indicator of the interest rate on savings deposits) over this period was 3%, according to the Bank of England.
Adjusted for the inflation rate of 3%, the “real” value of gold has increased by an average of 6% per year. In comparison, savers have not experienced any “real” increase in the value of cash in savings accounts due to inflation.
However, there is no guarantee that gold will perform in the future as it has in the past.
Is it a good time to buy gold?
Gold may offer investors a safe haven during times of economic and geopolitical volatility. It may also be a way to preserve wealth in a high inflation environment. Like stocks, the price of gold is volatile. However, it has increased in value over the past 30 years. Again, future performance is not guaranteed.
Investors should also consider the impact of exchange rate fluctuations when deciding whether to buy gold. Gold is typically traded in US dollars and therefore tends to have an inverse relationship with the US dollar. This means that the price of gold can fall when the US dollar strengthens against other currencies.
Over 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.
Overall, it is difficult to judge whether it is a good time to buy gold, as its price depends on a number of factors. Although a continuation of the current economic and political uncertainty could provide a tailwind for gold prices, investors should also be aware of the volatility of this asset.
Is gold losing value?
Gold is a limited commodity with a relatively static supply. The price of gold is therefore very sensitive to fluctuations in demand. A decline in demand therefore leads to a loss in the value of gold.
For example, the price of gold fell by over 25% from 2011 to 2013. It also fell from over $2,000 per troy ounce in mid-2020 to less than $1,700 in early 2021 – a decline of 17%.
How is the price of gold determined?
The price of gold is determined by the relationship between 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 customer orders. This is typically used for larger gold orders.
- Position: This is a “live” price that is widely used for buying and selling gold bars.
Is it worth investing in digital gold?
Digital gold (or digigold) is a form of digital currency that allows you to buy fractions of physical gold stored by the seller. Buyers of digital gold own the gold and have legal title to it, with the seller acting as custodian.
Digital gold allows buyers to invest by value – say £25 – rather than by weight (as with a 1 kilogram bar). Buyers can also invest a lower minimum amount than with the physical asset.
Digital gold also offers savings on storage and insurance. 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) depends on the price of gold, as explained in the questions above.
What types of gold can you invest in?
You can buy physical gold in the form of bars, coins or jewelry or invest in digital gold:
- Gold bars: These typically range in weight from one gram to over 10 kilograms. A premium is usually added to the spot price of the gold to cover the cost of production. The cheapest option currently sold by the Royal Mint is the one gram Britannia gold bar, which is 999.99 fine gold and retails for £70.
- Coins: These are available in lighter weights than gold bars. The flagship gold coins in the UK are the Sovereign and the 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 are therefore exempt from capital gains tax and VAT for UK residents.
- Jewelry: Jewelry, especially antiques, is another option. However, you may pay a premium of at least 20%, often more, relative to the gold content. This covers the labor costs of design and manufacturing, as well as the retail margin.
- Digital Gold: This allows you to buy and hold fractions of physical assets, with lower minimum investment amounts and savings on storage and insurance costs.
Investors can also consider an indirect form of gold, for example:
- Buying shares in companies that mine, refine and trade gold: Although mining company share prices correlate with gold prices, their share prices are also influenced by other factors.
- Buy gold and commodity funds: Specialized commodity, mining and exchange-traded funds can give investors access to gold without the hassle of trading and storing it in physical form.
*The gold price data above is from Zyla Labswhich obtains asset price data from a variety of sources. This gold price represents an average of spot prices for gold on several leading metal exchanges. Prices are updated every business day.
