Precious metals occupy a unique position in commodity markets — they are simultaneously industrial raw materials and monetary assets. Gold's millennia-long role as money means central banks hold it as reserves, while platinum and palladium are primarily industrial catalysts.
Precious Metals at a Glance
| Metal | Ticker | Unit | Primary driver |
|---|---|---|---|
| Gold | XAU | $/troy oz | Central banks, ETF flows, USD, real rates |
| Silver | XAG | $/troy oz | Solar demand, gold ratio, industrial use |
| Platinum | XPT | $/troy oz | Diesel autocatalysts, hydrogen fuel cells |
| Palladium | XPD | $/troy oz | Gasoline autocatalysts, Russian supply |
Precious Metals in Commodity Trade
B2B precious metal transactions typically involve:
- LBMA-approved bars — Good Delivery gold bars (12.4 kg, 99.5% minimum purity) are the standard unit for wholesale gold trade. Silver Good Delivery bars are typically 30 kg.
- Refinery certificates — Every bar carries a certificate from an LBMA-approved refinery (PAMP, Valcambi, Heraeus, Royal Canadian Mint, etc.)
- Chain of custody — Critical for responsible sourcing compliance (OECD Guidance, LBMA RGG); provenance documentation is required
- Secure vault storage — Brinks, Via Mat, Loomis, and specialist vault operators provide insured storage in LBMA-approved locations (London, Zurich, Singapore, HK)
Key Gold Price Drivers
- US real interest rates — Gold has no yield; it competes with TIPS and US Treasuries. Rising real rates increase the opportunity cost of holding gold → prices fall
- USD strength — Gold is priced in USD; a stronger dollar makes gold more expensive for non-US buyers, reducing demand
- Central bank buying — Central bank net purchases (China, India, Turkey, Poland) have been a major price driver since 2022
- Geopolitical risk — Gold is the classic safe-haven asset; conflicts, sanctions, and financial instability increase demand
Frequently Asked Questions
- What are the four precious metals?
The four primary precious metals are: (1) Gold (XAU) — monetary metal, central bank reserve asset, inflation hedge, and jewellery; (2) Silver (XAG) — industrial metal (solar panels, electronics) and investment asset; (3) Platinum (XPT) — catalytic converters, fuel cells, jewellery; (4) Palladium (XPD) — gasoline engine catalytic converters; widely used in autocatalysts. All four are traded on the LBMA (London Bullion Market Association) and CME Group.
- How is gold price set?
The LBMA Gold Price is the global benchmark, set twice daily (10:30 AM and 3:00 PM London time) through an electronic auction administered by ICE Benchmark Administration (IBA). The fix price is used as the reference for physical gold contracts, ETFs, central bank transactions, and jewellery pricing worldwide.
- Why do investors buy precious metals?
Precious metals — particularly gold — are bought as a store of value, inflation hedge, and safe-haven asset during financial uncertainty. Unlike currencies, gold cannot be devalued by central bank policy. Silver offers a lower entry point with additional industrial demand exposure. Platinum and palladium are more industrial than monetary, with prices driven heavily by autocatalyst demand.