Bid Price
Also: Bid, Buy Rate, Purchase Rate, Bid Side
The bid price is the price a dealer or market maker is willing to pay for a precious metal – that is, the buying price from the seller's perspective.
The bid price (or simply bid) is one of the two central prices that market makers and precious-metal dealers quote simultaneously. It indicates the price at which the dealer is willing to buy a precious metal. Anyone wishing to sell gold, silver or platinum receives exactly this price – less any further fees. Its counterpart is the ask price, at which the dealer sells the metal.
Bid and Ask: Two Sides of a Quote
In professional precious-metals trading, the bid price and ask price are always quoted together as a spread. The difference between the two prices represents the dealer's implicit trading margin and is not shown separately.
| Type | English | Perspective | Use |
|---|---|---|---|
| Bid | Bid | Buyer (dealer) | Purchase from customer |
| Ask | Ask | Seller (dealer) | Sale to customer |
| Spread | Bid-ask spread | Difference | Market maker's margin |
Example: If gold is quoted at a bid of £2,400/troy ounce and an ask of £2,415/troy ounce, the spread is £15. Anyone selling one troy ounce receives £2,400; anyone buying pays £2,415.
How the Bid Price Is Formed
The bid price is derived from the current spot price, which is traded continuously on the OTC market (over the counter) in London and on COMEX in New York. Dealers continually adjust their bid to the following factors:
- Liquidity and volatility: in times of high market uncertainty, dealers widen the spread – the bid falls relative to spot.
- Denomination and form: standard-size bars (e.g. the kilo bar) typically achieve a better bid price than broken gold or jewellery.
- Fineness: only the fine weight (not the gross weight) is paid for. A 585 gold ring is valued proportionately – the fineness is decisive.
- Volume: wholesalers and institutional sellers receive tighter spreads than retail customers.
Formula: Proceeds When Selling Metal
Proceeds = bid price (£/oz) × fine weight (oz)
With the Purchase Price Calculator you can calculate your specific sale proceeds based on the current gold price.
Bid Price vs. a Dealer's Buying Price
The bid price is an interbank/wholesale term; a retailer's buying price is usually somewhat lower, because the dealer factors in a spread of their own. Consumers therefore rarely achieve the full interbank bid on a cash sale. Transparent dealers publish their buying price as a percentage of the current spot bid.
Bid Price in the LBMA Fixing
In the LBMA fixing for gold (twice daily: AM and PM fix) and silver, a single reference price is set – no separate bid/ask. This fixing price serves as a reference for long-term contracts, valuations and settlements. In ongoing spot trading, by contrast, explicit bid and ask prices exist at all times.
In Brief
The bid price is the price at which you, as a private individual, can sell precious metals – it is always below the ask price. The tighter the spread, the fairer the trading conditions. Before selling, it is worth directly comparing several dealer offers against the current spot price as a reference.