Last updated on September 5th, 2022 at 11:16 pm
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luable metal that has been used to store wealth and increase finances for several decades. Many people opt for buying gold bullion, jewelry, and gold coins as financial assets.
Purchasing gold is a stable investment because gold prices do not fluctuate heavily, although they can decrease during periods of inflation.
Gold is primarily measured in troy ounces and troy pounds in the international market and 12 troy ounces make up 1 troy pound.
The price of 1 troy pound of gold was 22,372 USD at the most recent prices.
Let’s explore some of the factors determining the price of gold.
What Affects The Price of Gold?
When determining the price, you would have to pay for a pound of gold; two important models estimate gold’s value.
The gold spot price reflects the price of a troy ounce of gold as per the value on the international gold market.
It is always the case that the gold spot price reflects the bid price of stock exchanges worldwide.
This specific price is typically the same in all places, but you can expect it to vary slightly depending on two main factors: currency value and dealer premium.
Supply and demand also directly affect gold prices in a region, which basically means that the higher the number of people looking to buy gold worldwide, the higher the prices will shoot due to a bigger offer on the stock exchange.
However, it is important to note that you cannot buy gold bars or coins at this particular price because it only reflects the price for unprocessed metals.
The gold future price refers mainly to the delivery of gold in the future.
This price mainly affects the spot gold price, the changes in supply and demand, transportation costs, storage fees, and the rate of return.
Many people choose to opt for this investment type due to its advantage of not having to pay the entire amount upfront.
Instead, the buyer and seller reach an agreement that incorporates the weight of gold and its spot price.
The Price of 1 Pound of Gold And Variations Across Time
If you’re looking at the price of gold in the international gold market, you should know that it is measured in troy ounces, where 1 pound of gold is equivalent to 12 troy ounces.
Therefore, 12 troy ounces make 1 troy pound of gold, which cost 15,850 GBP, 18,448 Euro, and 22,372 USD at the most recent price.
The price of gold has remained relatively stable for many decades, but economic and political developments in the past several years have led to many fluctuations in recent years.
Comparing the price of gold from 2001 to 2016, the average price of gold changed from 271 USD to 1250 USD, which is an exponential growth.
The future is uncertain, and people simply cannot predict if gold prices will shoot up again or stay stable.
Factors Affecting Future Gold Prices
If you’re wondering whether gold is a wise investment, you need to consider all the factors that affect future gold prices to make an informed decision.
Some of the factors that influence gold prices include:
- Inflation. It is always the case that the price of gold drops due to inflation. However, the value is still relatively stable because inflation and deflation often change, resulting in a stable gold value.
- Interest Rate. When the interest rates are higher, gold’s value quickly drops, leading to people selling more gold to make money. In the opposite case, as interest rates drop, the demand for gold rises.
- Country Reserves. Every country possesses a certain amount of gold, and when it starts purchasing more gold than it sells, gold value skyrockets, and suddenly the supply becomes insufficient.
- Geopolitical Issues. If your country is in a geopolitical crisis, then gold’s value quickly rises, and gold becomes a safe investment.
Differences Between Ounces and Troy Ounces
These are important units of measurement that you must be accustomed to if you’re looking to deal with investment in gold.
A dry ounce is generally used to measure rice, sugar, and fruits; 16 dry ounces make up a pound.
A liquid ounce is generally used to measure liquids like water and milk; 1 liter equates to 33.8 US liquid ounces.
A troy ounce is used to measure the weight of valuable metals like gold, silver, and platinum. It is heavier than a traditional ounce by 3.1g, making it 31.1g per troy ounce.
A troy pound equals 12 troy ounces, as discussed above. Many traders prefer measuring gold in troy ounces rather than troy pounds, so a pound of gold is usually referred to as 12 troy ounces.
Understandably, there is slight confusion when converting ounces to pounds, but you should get used to it because gold bullion is usually measured in ounces or kilograms.
A troy ounce is just about 10% heavier than a traditional ounce, which is simple enough to remember, and a troy pound weighs more than a standard pound.
Gold prices can fluctuate depending on economic and political factors, but it has remained fairly stable over the past few years.
When measuring a gold pound in ounces, it is crucial to know the conversion between a troy ounce, standard ounce, troy pound, and standard pound since gold is measured using these units in the international market.
Gold will always remain a stable investment despite any fluctuations that might occur, which is why it’s crucial to invest in gold in order to keep your finances secure.