Why the Gold Price in Pounds Can Rise When the Dollar Price Falls

Gold is priced in US dollars first, then converted into pounds. The sterling price equals the dollar price divided by the GBP/USD exchange rate, so it moves when either one changes. If the pound falls by a bigger percentage than gold's dollar price, the price in pounds rises even though the dollar price has fallen.

Last updated: 9 November 2026

Gold is priced in US dollars first

The global benchmark price for physical gold is the LBMA Gold Price. It is set twice a day, at 10:30 and 15:00 London time, in an electronic auction run by ICE Benchmark Administration (IBA). During the auction, major international banks bid and offer gold until a single price is found that balances supply and demand. That price is always set in US dollars.

When the auction ends, the dollar price is converted into other currencies, including pounds sterling and euros. According to the LBMA Gold Price overview and the IBA methodology note, the published sterling and euro figures are indicative prices used for trade settlement.

This is why headlines usually quote gold in dollars: gold's price is discovered in dollars and it's traded internationally in dollars. If you're paying in pounds, however, it's the sterling price you want to pay attention to.

How the price in pounds is calculated

To calculate gold's price in pounds, take the US dollar spot price per troy ounce and divide it by the GBP/USD exchange rate:

Gold price in pounds (£/oz) = gold price in US dollars ($/oz) ÷ GBP/USD exchange rate

Because there are two variables in the equation, the sterling price can change even when the dollar gold price stays completely the same.

Example A: a falling dollar price with a weaker pound

Imagine gold is trading at $4,000 per troy ounce and the pound is at $1.30 against the dollar. If gold falls 2% to $3,920, but the pound drops 5% to $1.235, the sterling price actually goes up.

In this situation, headlines would report that gold fell by 2% while UK buyers see that the price in pounds rose by 3.2%. This is because the pound weakened against the dollar by a larger percentage.

Four ways the two prices can move

There are two variables in the equation, and each can shift in two directions. This gives us four combinations:

1. Gold's dollar price rises, pound weakens: Sterling price rises by more than the dollar price.
2. Gold's dollar price rises, pound strengthens: Sterling price rises by less than the dollar price, and can even fall.
3. Gold's dollar price falls, pound weakens: Sterling price falls by less than the dollar price, and can even rise.
4. Gold's dollar price falls, pound strengthens: Sterling price falls by more than the dollar price.

Example B: a rising dollar price with a stronger pound

Let's look at a reverse case of the example above. Again, we start with gold at $4,000 per oz while the pound trades at $1.30. Gold's price in pounds sterling is about £3,077.

This time, gold's price rises 3% to trade at $4,120 per oz while the pound strengthens 6% to $1.3780. Dividing gold's price in US dollars by the GBP/USD exchange rate gives you a sterling price of about £2,990 per oz.

In this example, news reports would show that gold went up by 3%. But because the pound strengthened by 6%, the price in pounds actually dropped by 2.8%.

For more information on what drives the market, see our guide to what drives the price of gold. You can also read our separate post on the correlation between the US dollar and gold prices, which covers the US Dollar Index.

Real examples from 2016 and 2022

We can look to a few real-world examples to see how the sterling gold price can diverge from the dollar price.

The Brexit referendum (June 2016)

On 24 June 2016, following the EU referendum result, the pound fell to its lowest level against the dollar since 1985. The same day, according to Bloomberg, gold's price in US dollars rose as much as 8.1% intraday. But because the pound fell so sharply, gold in sterling jumped much higher, by nearly 14%, to about £959/oz, after reaching an overnight peak near £1,019/oz (Reuters data).

The UK mini-budget (September 2022)

Following the 23 September 2022 mini-budget, the pound fell to a record low of about $1.035 on 26 September, as reported by Investment Week.

During that same week, gold in dollars was trading near two-and-a-half-year lows. Yet gold in sterling rose sharply, as the fall in the pound outweighed the dip in the dollar price.

Full-year 2022 performance

Data from the World Gold Council shows a clear split for the whole year of 2022:

• 2022 gold return in US dollars: +0.44%
• 2022 gold return in British pounds: +12.23%

So while gold was virtually flat in dollars across 2022, gold priced in sterling rose about 12% over the year, almost entirely because the pound fell against the dollar.

Note: Gold priced in sterling has historically risen when the pound fell sharply; this is not a guarantee for the future.

What this means when you buy gold in the UK

When you buy gold in the UK, the price you pay is the sterling spot price plus a product premium. You can learn more about how premiums work in our guide: Understanding Gold Premiums: Why You Pay More Than Spot Price.

Here are three things for UK buyers to keep in mind:

1. Watch the sterling price: Before you make a purchase, always check the price in pounds. Headline dollar prices will not tell you what you'll be paying in the UK. You can follow live movements on StoneX Bullion's gold price chart (choose Pound in the currency settings at the top right of the page to see prices in pounds).
2. VAT treatment: Investment gold is VAT-free in the UK. Silver, however, carries 20% VAT, so what you pay is 20% higher than the quoted pre-VAT price. For more details, read our guide on whether gold and silver are subject to VAT.
3. Product options: For investment gold, browse our selection of gold bars. For VAT-free and CGT-free investments for UK residents, view our Sovereign gold coins and Britannia gold coins.

Exchange rates and Capital Gains Tax

For UK tax purposes, capital gains are calculated in pounds sterling. A gain is calculated as your sterling sale proceeds minus your sterling purchase cost:

Gain (£) = sterling sale proceeds (£) - sterling purchase cost (£)

This means if you hold gold bars or foreign gold coins, a gain caused purely by the pound weakening still counts as a gain for Capital Gains Tax (CGT) purposes.

However, UK legal tender coins produced by The Royal Mint (such as Gold Sovereigns and Gold Britannias) are exempt from CGT. This means UK residents pay no Capital Gains Tax on gains made from these coins, regardless of what happens to the exchange rate.

To learn more, read our guide to CGT-free gold coins in the UK, our article on British gold coins, or browse our CGT-free investments category.

Disclaimer: This section provides general information only and does not constitute formal tax or financial advice.

FAQ

Why is gold priced in US dollars?

The LBMA Gold Price auction, run by ICE Benchmark Administration, finds the price in US dollars. That dollar price is then converted into other currencies, including pounds sterling and euros. This is why news reports usually quote gold in dollars.

Does a weaker pound make gold more expensive in the UK?

Yes. If gold's dollar price stays the same, a weaker pound means you need more pounds to buy the same amount of gold.

Is the LBMA Gold Price published in pounds?

Yes. While the auction itself takes place in US dollars, the final price is then converted into pounds sterling and euros as indicative settlement prices. This happens twice a day at 10:30 and 15:00 London time.

Which gold price should UK buyers follow?

UK buyers should follow the gold price in pounds sterling, as that reflects both the international gold price and the exchange rate. The dollar price can be useful, but on its own won't tell you what you are paying.

Can the gold price in pounds fall while the dollar price rises?

Yes. If the pound strengthens by a bigger percentage than gold's dollar price rises, the sterling price will fall. For example, if gold rises 3% in dollars while the pound rises 6%, gold's price in pounds would fall about 2.8%.

Sources and references

• LBMA Gold Price benchmark methodology: LBMA Gold Price FAQ and ICE Benchmark Administration consultation paper
• World Gold Council data: Goldhub gold price returns by currency
• UK FX and market data: Investment Week coverage of the September 2022 mini-budget; Reuters and Bloomberg coverage of 24 June 2016
• UK tax regulations: GOV.UK Capital Gains Tax guidance