When financial headlines report that the gold price is rising or falling, they are usually talking about gold priced in US dollars.
But that isn’t necessarily the price movement an investor experiences.
Whether you’re buying gold in Singapore dollars, British pounds, Euros, Australian dollars or another currency, the value of your local currency against the US dollar can significantly influence the price you actually pay.
This means gold can be rising in USD while increasing much less in another currency or even moving in the opposite direction.
Understanding this relationship is important when following the gold price today or comparing the performance of physical gold across different markets.
Why Is Gold Priced in US Dollars?
Gold is a global asset traded across major financial centres, with the US dollar serving as its principal international quotation currency.
The LBMA Gold Price is one of the world’s key benchmark prices for gold, while the metal itself continues trading across global markets throughout the day.
Gold prices respond to numerous factors, including interest rates, inflation expectations, central-bank activity, investment demand, geopolitical uncertainty and movements in the US dollar.
But for an investor outside the United States, the international USD price is only part of the equation.
How Do Exchange Rates Affect the Gold Price?
The basic relationship is:
Gold price in USD × local exchange rate = approximate gold price in local currency
Take a Singapore investor as an example.
If gold rises by 5% in US dollars but the Singapore dollar strengthens against the USD over the same period, the increase in the gold price in SGD could be less than 5%.
The reverse is also possible.
If gold remains unchanged in USD while the Singapore dollar, British pound or euro weakens against the dollar, gold can become more expensive in that local currency without the international USD gold price moving at all.
Investors outside the United States are therefore exposed to two moving variables: the gold price and their currency’s exchange rate against the USD.
Gold Can Reach Record Highs at Different Times Around the World
This creates an interesting feature of the global gold market: gold doesn’t necessarily reach a record high in every currency at the same time.
Imagine gold is trading close to an all-time high in US dollars.
If another country’s currency has strengthened considerably against the dollar, gold may still be below its previous record when measured in that local currency.
Conversely, a weakening domestic currency can push gold to new local highs even when the USD gold price hasn’t reached a record.
That’s why headlines about “record gold prices” need some context.
The first question should be: record price in which currency?
Why Currency Matters to Gold Investors
Gold has historically been held partly as a means of storing wealth outside conventional currencies.
For that reason, looking at gold exclusively through a USD lens can miss part of the picture.
An investor earning and spending primarily in SGD should pay close attention to the gold price in SGD. A UK investor may be more concerned with gold in GBP, while a European investor may focus on gold priced in EUR.
The underlying quantity of gold hasn’t changed.
What has changed is the value of the currency being used to measure it.
This becomes particularly relevant during periods of currency volatility, inflation or changing monetary policy.
Gold Price Per Ounce vs Gold Price Per Gram
International gold markets generally quote the metal by the troy ounce, with one troy ounce equal to approximately 31.1035 grams.
Physical investors, however, frequently purchase gold in grams and kilograms.
The approximate underlying gold price per gram can therefore be calculated by converting the international price into the desired currency and dividing the price per troy ounce by 31.1035.
However, this still isn’t necessarily the price you’ll pay for a physical gold bar.
Why Does Physical Gold Cost More Than the Spot Price?
The spot gold price represents the underlying wholesale market value of gold. Physical bullion will generally include a premium above spot.
That premium can reflect:
- refining and manufacturing
- minting or casting
- transportation and insurance
- wholesale and retail distribution
- product size and brand
- physical availability
Smaller gold bars will also generally carry higher premiums per gram than larger bars because manufacturing and handling costs are spread across a smaller quantity of gold.
Investors should therefore consider the premium above spot, rather than comparing physical products using the headline gold price alone.
What Should You Compare Before Buying Gold?
Whether you’re buying gold in Singapore, London, Sydney or elsewhere, the headline USD gold price is only the starting point.
Before purchasing physical bullion, consider:
- the international spot gold price
- the gold price in your local currency
- exchange-rate movements
- product weight and purity
- premium above spot
- applicable local taxes
- storage and delivery costs
- the dealer’s buyback pricing
These factors provide a much clearer picture of the actual cost of owning physical gold.
Think Globally, Measure Gold Locally
Gold trades globally, but its price is experienced locally.
The USD gold price remains the international reference point, but investors should also understand what is happening to gold in the currency in which they earn, spend and measure their wealth.
For Singapore investors, that means keeping an eye on the gold price in SGD alongside the international USD price. For investors elsewhere, the same principle applies to their respective currencies.
Understanding both sides of the equation can provide a clearer picture of whether gold itself is moving, the currency is moving — or both.
At Indigo Precious Metals, clients can view precious metals pricing across multiple currencies and access physical gold, silver, platinum and palladium from Singapore.
View the latest gold prices and explore our range of physical investment gold at Indigo Precious Metals.
This article is provided for general information and educational purposes only and does not constitute financial or investment advice. Precious metals and foreign exchange rates can rise or fall, and investors should consider their own circumstances before making an investment decision.