The price of gold and diamonds fluctuates over time. Not surprisingly, the demand for each of these items can have a significant impact on their values. However, plenty of other factors plays a role in determining the overall price of gold and diamond pieces. In fact, the spot gold price is determined quite differently than the diamond weekly price. Here is everything you need to know about how gold and diamond prices are calculated in the market.

Factors That Influence the Price of Gold

Gold is highly sought after for its use in jewelry making, electronic manufacturing, and investment opportunities. It is because of this demand that gold’s price has steadily increased over the years. However, while the value of gold is higher today than it was 50 years ago, it still experiences large fluctuations on a daily basis. Why is this? Here are the factors that play a role in determining the price of gold:

• Value of the United States Dollar: The value of gold is primarily based on the value of the U.S. dollar. When the dollar is worth more, the price of gold will drop. When the dollar is weak, the price of gold will skyrocket because more gold can be purchased with a weaker dollar.
• Jewelry and Investment Demand: Even as a precious metal, gold is not above the effects of supply and demand. As demand for consumer goods like gold jewelry and demand for exchange-traded funds continues to rise, the cost of gold will also increase.
• Gold Mine Production: Another example of the theory of supply and demand affecting the price of gold is the amount of gold mined. The more prosperous the gold mining production is, the lower the price of gold will be. However, in today’s day and age, gold mining is more challenging because miners have to dig deeper to reach gold reserves. This often translates into higher gold prices because gold-mining costs more.
• Economic Stability: As the economy becomes more unstable, people will begin making more gold purchases because they see it as a “safe haven” in uncertain times. The value of gold is enduring and can help people feel better about the troubling times they are in. When more people begin investing in gold, the price of this precious metal will be driven up.
• Central Bank Monetary Reserves: Central banks typically have both paper currencies and gold in reserve. When they buy more gold to diversify their reserves, the price of gold increases.

Factors That Drive the Price of Diamonds

Diamond prices are largely determined by a few producers, such as De Beers, who control the mining, processing, and marketing of rough, uncut diamonds. Because these companies have so much influence over how many rough stones make it into the market, they are able to control the value of these diamonds. The producers hold sights or events where companies purchase uncut diamonds in parcels. It is at these events that the price of diamonds is primarily established.

Once the diamonds are polished, a few other factors play a role in the price of cut diamonds. A Belgian industry broker named Martin Rapaport evaluates current market conditions with the help of his team and publishes a weekly Rapaport Diamond Report. In the report, the value of the diamonds is based on the four C’s: cut, carat, clarity, and color. Traders then use these Rap prices as a reference point during their transactions.

Spot Gold Price vs. Diamond Weekly Price: How Their Calculations Differ

While both the spot gold price and the diamond weekly price are in a constant state of flux, the value of gold is more volatile than diamonds, especially on a daily basis. This is because the daily price of gold is linked to the economy. Therefore, as the dollar value fluctuates, the value of gold drops or spikes. Four different banks update the official world reference for gold prices every day at 10:30 AM and 3 PM. This has been the practice since 1919.

Unlike gold, diamond prices are not updated daily. Instead, the Rapaport index in New York sets weekly diamond prices and lists them in the Diamond Bourses. It’s important to note that the diamond weekly price differs from the amount you pay at a jewelry store. The 4 C’s of the diamond, its certifications, and the jewelry brand all play a role in the final price you will pay for a diamond item.

Ensure You’re Being Paid a Fair Price for Your Gold or Diamonds

As you can see, the factors driving gold and diamond prices are complex. However, it’s important to understand how these prices are determined so that you know whether you’re being paid a fair price when selling your diamond jewelry or gold pieces.

We adhere to the spot gold prices and diamond weekly prices in every one of our transactions. In this way, you can feel confident you’re receiving the best price, whether you’re selling gold jewelry or pawning loose diamonds. Come by our shop today to discuss the market value of your gold or diamonds.