You read in the news that gold sets a record, but that figure is almost always in dollars per ounce. In Belgium you are paid in euros, per gram. Between the two sits a step many people overlook: the exchange rate. In this analysis we explain why it matters, and what moves it.
Two moves at once
The price you finally receive in euros depends on two things:
- The gold price in dollars. It is set internationally and moves constantly.
- The euro/dollar exchange rate. It determines how much a dollar is worth in euros.
Both move independently of each other. That is why the gold price in euros can rise even if the dollar price barely changes on the same day.
An example
Suppose the gold price in dollars stays flat, but the euro weakens against the dollar. Then that same amount of dollars is worth more euros, and the gold price in euros rises anyway. Conversely, a strong euro can flatten part of a dollar increase.
What moves the exchange rate
The euro/dollar rate is no accident. Three forces weigh heaviest:
- The interest-rate gap. When the US central bank keeps its rate higher than the European Central Bank, that draws money to the dollar and weakens the euro. If that gap reverses, the opposite happens.
- Economic growth. A stronger European economy makes the euro more attractive, a weaker one less so.
- Investor confidence. In uncertain times investors often flee to the dollar as a safe haven, which puts the euro under temporary pressure.
In recent years the dollar price of gold and the exchange rate often worked in the same direction. A high dollar price, combined with a rather weak euro, pushed the gold price in euros to successive records. For those selling in euros, that was doubly favourable.
What this means for your sale
The practical conclusion is simple: do not look at the dollar headline in the news, but at the price in euros per gram. That is the figure that decides what you receive.
A transparent buyer does that conversion for you: from the dollar rate per ounce, via the exchange rate, to a price in euros per gram of pure gold. Feel free to ask to see that calculation. That way you understand exactly how the world market translates into the amount in your account.
In short
The gold price in euros is not a copy of the dollar rate. The exchange rate always sits in between, and it is driven mainly by the interest-rate gap between the central banks. You do not have to follow it yourself, but it explains why the price in euros sometimes charts its own course. Want to know what that means for your gold today? A no-obligation valuation gives you the exact amount in euros.