Gold Glossary: Key Terms From A to Z
44 terms you will meet when you read about, buy or sell gold, defined in plain English. Where a term has a guide or a tool, it is linked beneath the definition. For longer explanations, go back to Learn.
A
- Allocated gold
- Gold held in your name as specific, identified bars or coins, kept separate from the custodian's own assets. If the custodian fails, the gold is still yours. Allocated vs unallocated gold →
- Ask price
- The price at which a dealer will sell you gold. It is always higher than the bid price, and the gap is part of the cost of buying.
- Assay
- A test that measures how pure a piece of gold is, by fire assay, acid testing or X-ray fluorescence (XRF). Refiners and reputable dealers rely on it, not on appearance. How to tell if gold is real →
B
- Backwardation
- A market state where the price for near delivery is higher than the price for later delivery. It is the opposite of contango and is unusual in gold.
- Bar
- Gold cast or minted into a rectangular piece, from one gram up to the 400 troy ounce Good Delivery bar that central banks and large investors hold. Smaller bars carry a higher premium per ounce.
- Bid price
- The price a dealer will pay when you sell gold to them. It sits below the ask price.
- Bid-ask spread
- The difference between the bid and ask prices. It is the dealer's margin and the round-trip cost of buying and then selling the same gold.
- Bullion
- Gold in bar or coin form that is valued mainly for the metal it contains, rather than for its design or rarity.
C
- Carat and karat
- Karat (K) measures the purity of gold out of 24 parts, so 24K is pure and 18K is 75 percent gold. Carat (ct) is a weight used for gemstones, equal to 0.2 grams. The two are easy to confuse because some countries spell both the same way. Gold price by karat →
- Central bank gold reserves
- Gold that a country's central bank holds as part of its official reserves. Central banks have been net buyers of gold in recent years. Why central banks buy gold →
- COMEX
- The New York commodities exchange, part of CME Group, where the most traded gold futures contract is listed. One contract covers 100 troy ounces.
- Contango
- A market state where the price for later delivery is higher than the spot price. It is the normal state for gold, because the later price includes the cost of storing and financing the metal.
D
- Dollar index (DXY)
- A measure of the US dollar against a basket of six major currencies: the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc. Gold is priced in dollars, so it tends to move opposite to the index.
- DWT (pennyweight)
- A traditional jewellery weight equal to one twentieth of a troy ounce, or 1.555 grams. Gold unit converter →
E
- ETF (gold ETF)
- An exchange-traded fund whose shares are backed by physical gold held in a vault, so the share price follows the gold price without the buyer arranging storage. Gold ETFs ranked by assets →
F
- Federal funds rate
- The interest rate target set by the US Federal Reserve. It is the biggest single driver of the dollar price of gold, because higher rates make a metal that pays no interest less attractive. Economic calendar for gold →
- Fineness
- Gold purity written in parts per thousand: 999.9 is pure gold, 916 is 22 karat, 750 is 18 karat and 585 is 14 karat. It is the number stamped on most gold jewellery.
- Futures contract
- An agreement to buy or sell gold at a set price on a set future date. Futures prices are closely tied to spot, and futures trading drives much of the day-to-day price movement.
G
- Gold standard
- A monetary system in which a currency can be exchanged for a fixed amount of gold. The United States ended the dollar's convertibility into gold in 1971.
- Gold-silver ratio
- The number of ounces of silver it takes to buy one ounce of gold. Investors watch it to judge whether one metal looks cheap against the other. Gold vs. silver →
- Good Delivery bar
- The standard bar of the wholesale gold market, set by the London Bullion Market Association: roughly 400 troy ounces (between 350 and 430) and at least 99.5 percent pure.
H
- Hallmark
- A stamp on a gold item that states its purity and often the maker or the assay office that tested it. It is the first thing to check on jewellery. How to tell if gold is real →
- Hawkish and dovish
- A hawkish central bank favours higher interest rates to fight inflation, a dovish one favours lower rates to support growth. Hawkish surprises usually weigh on gold and dovish ones usually support it. Economic calendar for gold →
I
- Inflation hedge
- An asset expected to keep its purchasing power when prices rise. Gold is often described this way, although its record against inflation over short periods is mixed. Gold vs. inflation →
K
- Krugerrand
- A South African one troy ounce gold coin, first minted in 1967, and one of the most widely traded bullion coins in the world.
L
- LBMA
- The London Bullion Market Association, the trade body for the wholesale gold market. It sets the Good Delivery standards and the LBMA Gold Price benchmark is set under its name twice a day. How the gold price is set →
- LBMA Gold Price
- A benchmark price for gold in US dollars set by auction in London at 10:30 and 15:00 local time every business day, and used to value many contracts and funds. It was formerly known as the London Gold Fix.
M
- Making charge
- The fee a jeweller adds to the value of the gold for designing and making a piece. It is why jewellery costs more than its metal content and why it sells back for less. Gold scrap value calculator →
- Melt value
- What the pure gold in an item is worth at the spot price, ignoring any collectible value or retail mark-up. It is the starting point for valuing scrap gold. Gold scrap value calculator →
N
- Numismatic
- Describes a coin that is worth more than its metal because of rarity, condition or history. Numismatic coins are priced by collectors, not by the gold price.
O
- Open interest
- The number of futures contracts that are outstanding and not yet closed out. Rising open interest alongside a rising price suggests new money is entering the market.
P
- Paper gold
- Claims on gold rather than the metal itself, such as futures, unallocated accounts and some funds. They are easy to trade but carry counterparty risk that physical gold does not.
R
- Real yield
- The interest rate on a government bond after subtracting inflation. Gold tends to fall when real yields rise, because holding it then costs more in forgone interest. Why gold falls when rates rise →
- Refiner
- A company that melts and purifies gold to a standard, then casts it into bars. Bars from refiners on the LBMA's accredited list are accepted worldwide.
S
- Safe haven
- An asset that investors buy when they are worried about markets, politics or the economy. Gold, the Swiss franc and US government bonds are the classic examples.
- Scrap gold
- Old, broken or unwanted gold items sold for their metal content rather than as jewellery. Buyers pay a share of the melt value, not the full amount. Gold scrap value calculator →
- Sovereign
- A British gold coin of 22 karat gold weighing 7.98 grams, which holds about 7.32 grams, or roughly a quarter of a troy ounce, of pure gold.
- Sovereign gold bond
- A government security denominated in grams of gold. India's version, issued by the Reserve Bank of India, paid interest on top of the gold price, and new issues have stopped. Sovereign gold bonds →
- Spot price
- The current market price for gold delivered immediately, quoted in US dollars per troy ounce. Every other gold price, from a coin to a jeweller's rate, is built on it. Live gold price →
T
- Tola
- A traditional South Asian unit of weight equal to 11.66 grams, still used to quote gold prices in India, Pakistan and parts of the Gulf. Gold unit converter →
- Troy ounce
- The weight used for gold and other precious metals, equal to 31.1035 grams. It is heavier than the everyday ounce of 28.35 grams, which is a common source of mistakes. Gold unit converter →
U
- Unallocated gold
- Gold held as a claim on a custodian's pooled stock rather than as specific bars. It is cheaper to hold and easier to trade, but you are a creditor of the custodian, not the owner of identified metal. Allocated vs unallocated gold →
X
- XAU
- The international currency code for one troy ounce of gold. A quote for XAU/USD is the price of an ounce of gold in dollars.