What is the difference between karat and carat?

Karat measures the purity of gold out of 24 parts. Carat is a unit of weight for gemstones equal to 0.2 g. In British English "carat" is also used for gold purity.

XAU is the international code for one troy ounce of gold, used in currency and commodity markets like a currency code. XAU/USD is the gold price in dollars.

What is the difference between bid and ask?

The bid is what a dealer pays you; the ask is what you pay the dealer. The gap between them is the spread.

Gold Glossary: 45 Terms Every Buyer and Seller Should Know

How to use this glossary

The gold market has its own vocabulary, and dealers sometimes use it to make simple things sound complicated. The definitions below are short and practical. Where a topic deserves more space, we link to a full guide: for purity see gold karats explained, for weights see gold weight units, and for pricing see what is the spot price of gold.

Gold terms from A to Z

Alloy: A mixture of gold with other metals such as silver, copper, zinc, nickel or palladium. Alloys make gold harder and change its colour; the share of gold sets the karat.
Allocated storage: Vault storage in which specific, numbered bars or coins are registered in your name. If the custodian fails, the metal remains yours.
Ask (offer): The price at which a dealer will sell to you. It is always above the bid.
Assay: A test to determine the exact purity of a metal. An assay card or certificate accompanies many small bars.
Bid: The price at which a dealer will buy from you.
Bullion: Gold or silver in bars, ingots or coins valued mainly for their metal content.
Carat (gemstones): A unit of weight for gemstones equal to 0.2 g. It is unrelated to gold purity; in British English "carat" is also used for gold karats.
COMEX: The commodities exchange in New York, part of CME Group, where the most actively traded gold futures are listed.
Doré: Semi-pure gold, often 60–90% gold mixed with silver, poured at a mine and sent to a refiner.
ETF (exchange-traded fund): A fund traded on a stock exchange. Physically backed gold ETFs hold bars in a vault and track the gold price.
Fine gold: The pure gold content of an item, regardless of the alloy around it.
Fineness: Purity expressed in parts per thousand: 999.9, 999, 916, 750, 585 and so on.
Fire assay: The most accurate method for measuring gold content, used by refiners. It melts and destroys a sample.
Futures contract: An agreement to buy or sell a fixed amount of gold at a set price on a future date. Futures prices include the cost of carrying gold until delivery.
Gold-filled (GF): A thick layer of gold bonded to a base-metal core, typically at least 5% of the item’s weight. Not solid gold.
Gold-plated (GP, GEP, HGE): A very thin layer of gold applied by electroplating to another metal. Its scrap value is minimal.
Gold standard: A monetary system in which money can be exchanged for a fixed amount of gold. The United States ended the dollar’s convertibility into gold for foreign governments in 1971.
Good Delivery bar: A large bar of about 400 troy ounces (12.4 kg) meeting the LBMA standard, the unit of the wholesale market.
Hallmark: A stamp showing purity, and often the maker and an assay office. It is the quickest way to identify an item’s karat.
Karat (K, kt): Purity measured out of 24 parts: 24K is pure gold, 18K is 75% gold, 14K is 58.5%.
Kilo bar: A one-kilogram bar (32.15 troy ounces), the standard size for large investors.
LBMA: The London Bullion Market Association, which sets standards for the wholesale gold market and oversees the LBMA Gold Price benchmark.
LBMA Gold Price: The benchmark price set twice each London business day in an electronic auction, used to settle many contracts. It replaced the old "London fix".
Making charge: The cost of designing and crafting jewelry, added to the gold value. It may be a percentage or an amount per gram.
Melt value: The value of the pure gold in an item at the current spot price, ignoring design, brand or stones.
Mithqal: A traditional weight. The Islamic mithqal of about 4.25 g underlies the zakat nisab; local market mithqals differ.
Nisab: The minimum wealth above which zakat is due, commonly 85 g of gold or 595 g of silver.
Numismatic coin: A coin valued for its rarity, age or condition as well as its metal. Its price can be far above melt value.
Pennyweight (dwt): One twentieth of a troy ounce, or 1.5552 g, still used in the US and UK jewelry trade.
Premium: The amount a buyer pays above spot for a bar, coin or piece of jewelry.
Refiner: A company that purifies gold to 99.5% or more and produces bars. Recognised refiners appear on the LBMA Good Delivery list.
Rose gold: A gold alloy with a high copper content, giving a pink colour. Its karat is stamped the same way as yellow gold.
Scrap gold: Gold jewelry or objects sold for their metal content, to be melted and refined.
Sovereign: A British gold coin containing 7.32 g of pure gold. In South India and Sri Lanka "sovereign" or "pavan" also means 8 g of jewelry gold.
Spot price: The current market price for immediate delivery of one troy ounce of pure gold, quoted in US dollars.
Spread: The difference between the bid and ask prices; your round-trip cost when you buy and later sell.
Tael: A Chinese unit of weight. The Hong Kong gold tael is 37.429 g; other markets use slightly different taels.
Tola: A South Asian and Gulf unit equal to 11.6638 g (180 grains).
Troy ounce: The standard unit for precious metals: 31.1034768 g, about 10% heavier than an ordinary ounce.
Unallocated gold: A claim on a pool of gold held by a bank or provider. You are an unsecured creditor, not the owner of specific bars.
Vermeil: Sterling silver coated with gold. Often stamped 925.
White gold: Gold alloyed with white metals such as palladium or nickel, usually plated with rhodium for a bright finish.
XAU: The international currency code for one troy ounce of gold. XAG is silver, XPT platinum and XPD palladium.
XRF analyser: A device that uses X-ray fluorescence to read the metal composition of a surface in seconds without damaging it.
Zakat: An obligatory annual payment of 2.5% of qualifying wealth above the nisab, one of the five pillars of Islam.

Putting the words together

Here is how the vocabulary fits together in a typical transaction. The spot price of gold, quoted per troy ounce in dollars, is converted into your currency and weight unit. A dealer adds a premium when selling bullion to you (the ask) and pays a lower bid when buying it back; the difference is the spread. For jewelry, the melt value depends on the item’s karat or fineness, which you can read from its hallmark, while the retail price adds a making charge and tax.

You can see every one of these numbers in practice on our live gold price page and in the gold calculator.