Gold Price

Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the amount of gold present, with 24 karats being pure gold and lower ratings proportionally less. The purity of a gold bar can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995 being very pure.

The price of gold is determined on the open market, but a procedure known as the Gold Fixing in London, originating in September 1919, provides a daily benchmark figure to the industry. The afternoon fixing appeared in 1968 to fix a price when US markets are open.

The high price of gold is due to its rare amount. Only three parts out of every billion (0.000000003) in the Earth's crust is gold.
Gold price per ounce in USD since 1968, in actual US$ and 2006 US$
Gold price per ounce in USD since 1968, in actual US$ and 2006 US$

Historically gold was used to back currency; in an economic system known as the gold standard, a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equal to $20.67 ($664.56/kg), but in 1934 the dollar was revalued to $35.00 per troy ounce ($1125.27/kg). By 1961 it was becoming hard to maintain this price, and a pool of US and European banks agreed to manipulate the market to prevent further currency devaluation against increased gold demand.

On 17 March 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank in New York, which holds about 3% of the gold ever mined, as does the similarly-laden U.S. Bullion Depository at Fort Knox.

Since 1968 the price of gold on the open market has ranged widely, with a record high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Fixing). On 11 May 2006 the London gold fixing was $715.50/oz ($23,006/kg).

In 2005 the World Gold Council estimated total global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes.

2007 28-yr high

On October 1, 2007, gold hit a 28-year high against the U.S. dollar due in part to the dollar's fall to record lows against the euro. At that time, the price of spot gold was $743.70 per ounce. Its previous high (not adjusted for inflation) was roughly $850 per ounce in January 1980.

LBMA USD morning price fixings ($US per troy ounce) since 2001

Gold price per ounce in USD since 1968, in actual US$ and 2006 US$