If you're buying a custom engagement ring, you've probably noticed gold prices keep making headlines. Here's what's actually happening in the gold market and why it matters for your ring budget.

How the Gold Market Works

Think of the gold "market" less as a specific supermarket for gold and more like a global network. It’s where gold is bought and sold, 24/7, across the world. The main hubs for professional gold trading are London and New York, with other significant centres in places like Zurich and Shanghai.

The price you often hear quoted is the "spot price" – that’s essentially the current market price for gold if you were to buy it and have it delivered right now. This price can move up and down throughout the day based on global events and trading activity.

Who are the Big Players on the Gold Stage?

A whole cast of characters keeps the gold market moving:

• Mining companies dig gold out of the ground, from vast mines in places like China, Australia, Russia, and the USA. They're the ultimate source of new gold.
• Refiners take the raw gold (and recycled gold) and purify it to very high standards – often 99.99% pure, known as "fine gold" or what forms the basis of 24 karat gold. This is then made into bars, coins, or granules for manufacturers.
• Bullion Banks are major international banks (like HSBC, JPMorgan Chase, & UBS). They are the big wholesalers. They buy gold from miners and refiners, trade it amongst themselves, sell it to manufacturers and investors, and provide storage and financing. They are key to making the market work smoothly.
• Central Banks manage a country's currency and monetary policy (like the Bank of England). They hold gold as part of their national reserves. When central banks buy or sell gold (and some have been buying a lot recently!), it can significantly impact the market.
• Investors from big investment funds buying gold bars or shares in gold-backed Exchange Traded Funds (ETFs), right down to individuals buying gold coins or small bars as a way to save or protect their wealth.
• Jewellery Manufacturers & Industrial Users buy gold (often from bullion dealers or specialised suppliers who get it from refiners/bullion banks) to create jewellery. Gold is also used in electronics, dentistry, and other industries due to its unique properties.

What Makes Gold Prices Go Up and Down?

Like many things, gold prices are mainly driven by supply and demand. But what influences that supply and demand?

• Global Economic Climate:
  • Inflation. When the cost of living is rising (inflation), gold is often seen as a "safe haven" because it tends to hold its value better than cash. So, higher inflation can mean higher gold prices.
  • Interest Rates. If interest rates are low, savings accounts don't offer much return. This can make gold (which doesn't pay interest) look more attractive by comparison. Conversely, high interest rates can sometimes make gold less appealing.
  • Currency Strength (especially the US Dollar). Gold is priced globally in US dollars. If the dollar weakens, it takes more dollars to buy an ounce of gold, so the dollar price of gold goes up. If the dollar is strong, gold can become cheaper in dollar terms.
• Geopolitical Events & Uncertainty. During times of global instability, political unrest, or war, investors often flock to gold as a safe place to put their money. This increased demand pushes prices up.
• Central Bank Activity. As mentioned, when central banks decide to buy large quantities of gold for their reserves, it significantly boosts demand and prices. If they were to sell, it would increase supply and could push prices down.
• Investor Sentiment & Speculation. Sometimes, prices move simply because many investors believe they will, leading to buying or selling that fulfils that expectation.

How Do These Prices Affect Your Bespoke Jeweller (and Your Ring)?

When you commission a bespoke engagement ring, your independent jeweller typically doesn't have a stock of gold sitting around. Here's what happens:

1. They calculate how much gold your design needs.
2. They buy that exact amount from suppliers like Betts Metals or Cookson Gold.
3. The supplier prices gold based on current market rates.
4. This cost goes directly into your ring's price, along with gemstones, labour, and the jeweller's margin.

So, if the gold price rises by, say, 0.5% or 1% on the day your jeweller is pricing or ordering the metal for your ring, their cost for that specific piece of gold goes up by that amount. For small, daily fluctuations, a jeweller might have a tiny bit of wiggle room in their overall pricing, but significant and sustained increases in the gold price will inevitably be reflected in the cost of new pieces.

It’s different for ready-made jewellery already in a shop window, as that was likely made with gold purchased when prices were different. But for your unique, made-to-order ring, the current gold price is a very real factor.

Why Have Gold Prices Been Increasing Recently?

You might have noticed in the news that gold prices have been hitting record highs over the past couple of years. There isn't one single culprit, but rather a perfect storm of factors:
Central Banks on a Buying Spree. This is a huge one. Central banks around the world, particularly in countries like China, India, and Turkey, have been buying gold in enormous quantities. They're doing this to diversify their reserves away from the US dollar and as a hedge against global economic and political uncertainty.

• Geopolitical Instability. Sadly, the world has seen its share of conflicts and tensions recently, such as the war in Ukraine and other regional instabilities. This makes gold, the traditional safe-haven asset, very attractive.
• Inflation Worries. We've all felt the pinch of rising prices. Lingering concerns about inflation globally have pushed investors towards gold as a way to protect the value of their money.
• Economic Uncertainty & Recession Fears. Worries about slowing global economic growth and the possibility of recessions in major economies also tend to drive people towards the perceived safety of gold.
• Expectations Around Interest Rates. While interest rates have been high to combat inflation, there's been a lot of talk about when central banks (like the US Federal Reserve) might start cutting rates. The anticipation of lower rates can make gold more appealing.

In today's economy, every penny counts. You might be wondering why a quote for your dream ring today differs from an estimate you had in mind from some time ago, or why prices can seem so fluid. It's a direct reflection of the very real and dynamic global gold market. When the cost of raw gold rises for everyone – from central banks to bullion dealers – it inevitably impacts the cost of the granules or wire your jeweller must purchase for your ring. They are essentially navigating these fluctuating wholesale costs on your behalf to procure the best materials for your commission.

However, the recent surge in gold prices, driven by major world events and shifts in economic strategy, highlights its solid role as a store of wealth. When you invest in a gold engagement ring, a significant portion of that cost is the gold itself – a material that has held its worth through centuries.

FAQs

What causes the price of gold to change?

Gold prices fluctuate based on supply and demand factors including inflation rates, interest rates, currency strength (especially the US dollar), and geopolitical events that drive investors towards safe-haven assets. Central bank buying and selling activity also significantly impacts prices, as these institutions can move massive quantities that affect global supply.

Is it wise to buy gold in 2025?

Gold can serve as a hedge against inflation and economic uncertainty, but it doesn't generate income like shares or bonds, so it depends on your investment goals and risk tolerance. Given current high prices and economic volatility, consider it as part of a diversified portfolio rather than a primary investment strategy.

In which country is gold the cheapest?

Gold prices are largely standardised globally due to efficient international markets, though countries like India, Turkey, and some Middle Eastern nations may offer slightly lower premiums due to high local demand and established trading infrastructure. However, taxes, import duties, and currency exchange rates often offset any price advantages when purchasing from abroad.

Why is gold suddenly surging?

The recent surge is primarily driven by massive central bank purchases, especially from China, India, and Turkey, as they diversify reserves away from US dollars amid growing geopolitical tensions. Economic uncertainty, inflation concerns, and expectations of potential interest rate cuts have also pushed investors towards gold as a safe-haven asset.