Troy Ounce of Gold
A troy ounce of Gold is equal to 31.10 grams. It's a unit of measure first used in the Middle Ages, originating in Troyes, France. In ancient times, the price of gold was even more steep because gold was one of the most coveted and valuable of commodities. Today, the gold price per ounce is still extremely high, and determined by many more factors.
Pure gold is very expensive to mine and refine. Mining industries on average must move 9.4 tons of earth in order to procure the weight of approximately one golf ball sized sphere of pure gold. The difficulties don’t end there however – gold is frequently alloyed in with other raw metals and requires an expensive gold purification process to fully separate..
The jewelry industry also has a major impact on the price per ounce of gold. This should come as no surprise, given that gold is the most sought-after jewelry commodity for weddings, fashions and exquisite gifts. Approximately 46% of gold demand in Q1 2017 came from the jewelry market. If the demand for gold jewelry goes up from one year to the next, the supply of gold will have to rise to meet this demand.
In the tech industry, gold holds unique properties as a corrosion-resistant electrical conductor. Including gold inside many modern electronic devices has become a staple for manufacturers globally. This industrial demand for gold adds to the scarcity, playing a role in determining the gold price. As time moves forward, more and more gold will be consumed by this industry.
Central bank reserves are also instrumental in setting the price for gold. Central bank reserves from the United States and throughout Europe engage in the buying and selling of gold in huge quantities. As national economies move away from paper money, central banks will only continue to invest more into their gold reserves. Gold has always been a more stable and reliable investment opportunity than to invest in national economies (which often go through prolonged periods of inflation). This drives the price of gold up on the markets once again.
In the United States, there is a general inverse correlation between the value of USD and the price of gold. When the USD is strong, the price of gold falls. When the price of gold rises, the USD weakens.
This once again highlights one particular determining factor for the true importance of bullion gold - it is able to store value as currency weakens in global markets. Pay close attention to the gold price. With this metric in mind, the price of gold will allow for much insight into the health of global markets.