Before I was a part of the Bullion Industry, I had always wondered how the price of Gold is actually calculated. I would always assume like any other common man that the price of Gold would most likely be the result of the economic forces of Demand and Supply. True they do play a part as price determinants but they are not the only factors. Besides the market forces and other external forces that determine the price of Gold and for any other commodity for that matter, there is actually a procedure in place to determine the price of Gold for The International Market. Today we will take a look at the procedure to better understand the process.
Before we do that though, we need to understand a very important term which is “Troy Ounce.” So what exactly is a Troy Ounce?
Troy ounceis the international unit to weigh Gold and is also used to weigh other precious metal and gemstones.
So how much is exactly a Troy Ounce?
1 Troy Ounce = 31.1035g
Now consider the fact that the purest amount of Gold in any gold bar is 99.5%. So, given this fact, it can be derived that if you have 1kg Gold Bar with you then your actual amount of Gold in the Gold Bar is 995g and rest are impurities.
Now consider the following example: If for example: today’s Gold Rate is at $1330 per troy ounce and we need to calculate the current gold price for 1kg Gold, then the gold rate today would be calculated as:
$1330 x 31.99 (995g = 31.99 Troy Ounce) = $42,546.70
So to calculate the price of 1kg Gold for the International Market you need to take the prevailing price of Gold and multiply it with the 31.99 Troy Ounce which is basically equal to 995g and you will get the current gold price for any given day.
The views expressed in this blog are those of the author and may not reflect those of Jindal Bullion Limited. The author has made every effort to ensure accuracy of information provided; however, neither Jindal Bullion Limited nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Jindal Bullion Limited and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.