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Why does gold cost more than the spot price?
The spot price is the benchmark price for one troy ounce (31.1g) of gold traded on wholesale markets. It is set twice daily by the London Bullion Market Association (LBMA) — the AM and PM fix — and fluctuates continuously on international exchanges 24 hours a day.
When you buy physical gold from a dealer, you pay a premium over spot. This premium covers:
- Fabrication costs — minting, assaying, and packaging bars or coins
- Dealer margin — the spread between their sell price (what you pay) and buy price (what they pay you) is how dealers make a profit
- Logistics — the manufacturer's costs to mint, insure, and ship the product to dealers
- Demand premiums — popular coins (e.g. Australian Kangaroos) carry higher premiums than plain bars
Premiums typically range from 1–5% for large bars to 5–12% for coins. Buying larger products (e.g. a 100g bar vs a 10g bar) usually lowers the per-gram premium.
Sources: LBMA (lbma.org.uk), World Gold Council (gold.org)
Disclaimer: Prices shown are sourced from publicly available dealer websites and are indicative only. They may be delayed, inaccurate, or out of date. CompareGold.com.au is not a financial service and does not provide financial advice. Always verify prices directly with the dealer before transacting. Gold investment carries risk; past performance is not indicative of future results.
This information is general in nature and has not taken into account your objectives, financial situation or needs. Consider whether this information is right for you before acting on it.
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