What Is Gold Bullion and How Is It Priced?

Gold bullion refers to physical gold, most commonly available as gold bars and gold coins. Often called investment-grade gold, it enables investors to add precious metals to their portfolios, protect long-term wealth, and reduce risk during periods of inflation or economic uncertainty. Unlike gold jewellery, bullion is valued mainly for the gold it contains, not for its design or decorative appeal.

Table of Content

• What is Gold Bullion?
• Factors That Determine the Value of a Gold Bar
• How is the Price of Gold Determined?

Here’s everything you need to know about gold bullion: the factors to consider, the different forms it comes in, how gold bars compare to gold coins, and what to keep in mind before investing.

What is Gold Bullion?

Gold bullion is high-purity physical gold produced specifically for investment. It is available in several forms, including bars, coins, rounds, and ingots. To qualify as bullion, gold bars must have a minimum purity of 99.5%, while gold coins may follow slightly different purity standards based on the issuing authority.

What sets gold bullion apart from jewellery and collectable gold items is how it is valued. Its price is based purely on its precious metal content, rather than craftsmanship, age, rarity, or historical importance. While many gold coins are legal tender and carry a face value in their country of origin, their real worth is far higher because of the gold they contain. Gold bars, on the other hand, are made solely for investment, and their value depends entirely on their weight and purity.

For many investors, gold bullion remains a trusted asset for preserving value, offering financial stability during uncertain times, and acting as a reliable hedge against inflation. It is also commonly accepted when applying for a gold loan due to its high purity and transparent valuation.

Factors That Determine the Value of a Gold Bar

Gold Spot Price

The spot price refers to the wholesale rate at which large 400-ounce gold bars, known as London Good Delivery bars, are traded between banks in global markets. Individual investors usually pay slightly more than this price. Since gold bars are simpler to manufacture than coins, they generally carry lower premiums. Larger bars, in particular, tend to be sold with smaller mark-ups by dealers.

Gold Purity

Under the London Good Delivery standards regulated by the London Bullion Market Association (LBMA), investment-grade gold bars must contain at least 99.5% pure gold. A higher purity level directly increases the bar’s value, making fineness an important factor when assessing worth.

Market Demand

Gold bars with higher purity levels are often more desirable to investors and can attract higher premiums. Changes in supply and demand play a major role in determining how much extra buyers are willing to pay above the spot price.

Weight

Weight has a direct impact on value. Simply put, heavier gold bars contain more gold, which makes them more valuable.

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How is the Price of Gold Determined?

Gold prices are largely driven by supply and demand. As a limited natural resource, gold commands a high value and is used across multiple sectors, including investment, jewellery, collectibles, and industrial applications.

Pricing is influenced by major financial institutions, oversight bodies, and expert panels that assess activity in gold futures and derivative markets. Based on these market dynamics, they determine both the live spot price and benchmark fixed prices.

Two of the most influential gold trading platforms are the COMEX division of the CME Group in the United States and the London Bullion Market Association (LBMA) in the United Kingdom.

Bullion refers to physical gold and silver of high purity, most commonly available in the form of bars, ingots, or coins. Central banks often hold bullion as part of their reserves, while institutional investors use it to manage risk and protect their portfolios.

Suggested Read: How are Gold Rates Determined in India?

If wondering how to buy gold bullion, investors can gain exposure to bullion in several ways, such as buying physical gold or silver, investing through exchange-traded funds (ETFs), or trading futures contracts. Bullion is widely seen as a safeguard against inflation and is especially valued during periods of economic uncertainty. Today, multiple international bullion markets offer opportunities to buy, sell, and trade these precious metals.