Gold Education
Gold Basics
Spot Price, Bid, Ask and the Spread
There is no single gold price. There is a price you can buy at, a lower price you can sell at, and the gap between them is somebody’s income.
The “spot price” is what one troy ounce of 24K gold trades for right now for immediate settlement. It is a reference, not an offer. What you can actually transact at is always two numbers.
Two prices, always
- Ask — The higher number. What the dealer will sell to you for — your buying price.
- Bid — The lower number. What the dealer will buy from you for — your selling price.
- Spread — Ask minus bid. The dealer’s margin, and your immediate cost of entry.
Why you are “down” the moment you buy
Buy at the ask and the only price you could sell back at is the bid. So the instant you own it, your position is worth the spread less than you paid. Gold has to move at least that far just to break even.
What makes a spread wide or narrow
- Liquidity — Big, actively traded forms have narrow spreads. Unusual items are wide.
- Form — Bars and standard coins price close to spot. Jewellery carries a making charge that behaves like a much wider spread.
- Size — Very small pieces cost proportionally more to make and handle.
- Trust — An unknown seller’s gold has to be tested, and that cost lands in the spread.
The practical lesson: before you buy anything, ask what the same shop pays back for it today. That one question turns an invisible spread into a number you can compare between sellers.