In most cases it isn't explained. The dealer weighs the gold, checks the purity of the item, thinks for a moment and names a price. If you ask what it's based on, the answer is usually vague: "Based on the current price level" or "The market price is this."
Where does that number come from?
There is a concrete, public and verifiable figure — one that industrial buyers, central banks and gold exchanges use around the world. It is called the spot price, and it is determined by the LBMA.
In this article we explain what these mean, how the number arises and what it means when you come to sell your own gold.
What is the LBMA
LBMA stands for London Bullion Market Association. It is an international body founded in 1987 that oversees the London gold market — by far the world's most important wholesale marketplace for gold.
The LBMA does not sell gold to consumers. Its role is to act as a reference point and standard-setter. It determines:
- What constitutes "high-quality investment gold" (the Good Delivery standard)
- Who is permitted to operate as an approved refiner
- How the gold reference price is set
- How ethical standards in the gold trade are monitored
The majority of the world's physical gold passes at some point through LBMA-approved refiners and vaults. Central banks, gold exchanges, industrial users and investment funds all participate in this flow.
The LBMA is a neutral and public body. It gains nothing from the direction prices move. It simply reports what is happening in the market.
What is the spot price
The spot price refers to gold's immediate market price right now.
When gold prices are quoted on exchanges there are two main pricing models: the spot price (immediate trading, cash payment, gold delivered within two days) and the futures price (an agreement for the future delivery of gold at a specific date).
The spot price is what matters when talking about real, physical gold — like your ring.
The spot price is formed continuously through global markets:
- London (LBMA, LME)
- New York (COMEX)
- Zurich (Swiss gold exchange)
- Shanghai (Shanghai Gold Exchange)
- Hong Kong, Mumbai, Tokyo
When any of these markets is open, gold is being bought and sold continuously. The price fluctuates according to the balance of supply and demand.
The gold spot price changes continuously almost around the clock. The LBMA Gold Price serves as the official reference price, set twice daily at 10:30 and 15:00 London time in an electronic auction administered by ICE Benchmark Administration. This is also the price at which Gold Lab trades with its customers.
Why the spot price varies
The gold price moves for several reasons:
Geopolitical uncertainty
When there are crises in the world — wars, economic crises, political upheavals — investors buy gold as a "safe haven". The price rises.
Interest rates and central bank policy
When interest rates are low, gold becomes more attractive as an investment because alternative investments yield no return. When rates rise, gold often falls.
The dollar exchange rate
Gold is priced globally in US dollars. When the dollar weakens against other currencies, the gold price in dollars rises — and vice versa.
Central bank gold purchases and sales
The world's central banks buy and sell gold as reserves. For example, the central banks of China and Poland have been major buyers during the 2020s.
Inflation
Gold is traditionally seen as a hedge against inflation. When the general price level rises, gold often follows upward.
Industrial demand
Electronics, medical devices and jewellery consume roughly half of the world's annual gold production. Economic cycles affect this demand.
In practice the spot price moves continuously and fluctuations can be several percent within a week. Over a month, movements can be tens of percent, particularly in crisis situations.
What the spot price means when you sell your gold
The spot price is a reference point, not a direct purchase price.
When you bring a ring to a shop, the dealer cannot pay the full spot price, because it costs something to convert the ring back into investment gold. Refining, logistics and assessment require work. That is a legitimate cost that must be deducted from the price.
But the question is: how large should this deduction be, and is it transparent?
A concrete example. Say you have 10 grams of 18-carat gold (75% pure gold) and the spot price is €72/g of pure gold.
The difference is that Gold Lab's model is public and can be calculated in advance. You can open the calculator and do the same calculation yourself. You can compare other gold dealers' offers against this — then you know how much value is being hidden.
Why this matters
Selling gold is often a once-in-a-lifetime decision. You don't sell gold every week. You don't know the market. You don't know what price is reasonable — unless you investigate in advance what the pricing is based on.
This imbalance has existed in the gold trade for a very long time. One party knows more than the other and exploits that in transactions.
When the spot price is public information and the fee structure is specified to the euro, the imbalance disappears. You have the same information as we do. That is Gold Lab's model: world market price minus a transparent fee.
You can always check the current spot price on our homepage. You can calculate what your gold is worth before bringing it to us. And when you receive an offer you can compare it with your own calculation.
That is why the LBMA, the spot price and the fee breakdown matter more than just the recommendation of a dealer who seems trustworthy. The numbers tell a story that can be verified.