Why Does the Gold Price Change?

1. Real interest rates

Gold pays no interest. When a 10-year inflation-protected US Treasury yields 2 % above inflation, holding gold has a clear opportunity cost; when real yields are negative, that cost disappears. This is why gold rallied hard in 2019–2020 as real yields fell below zero, and struggled in 2013 and 2022 when they rose quickly.

2. The US dollar

Gold is priced globally in dollars. A weaker dollar makes gold cheaper for buyers using euros, rupees or yuan, which lifts demand and the dollar price. The reverse also holds. That's why the gold price in your local currency can rise even on a day when the dollar price falls — currency moves matter as much as the metal.

3. Inflation and money supply

Over decades gold has preserved purchasing power: an ounce bought a good men's suit in 1920 and still does. Over shorter periods the link is loose. Gold rose from $35 to $850 during the 1970s inflation, but was flat through much of the 1980s and 1990s while inflation was still positive. Inflation expectations, rather than the headline rate, move the price.

4. Central bank buying

Since 2010 central banks have been net buyers of gold, and since 2022 they have bought over 1,000 tonnes a year according to the World Gold Council — roughly a quarter of annual demand. China, Poland, Turkey, India and others are diversifying reserves away from the dollar. This steady, price-insensitive buying is a major reason gold reached record highs in 2024 and later.

5. Investment flows: ETFs, futures and bars

Gold-backed ETFs hold thousands of tonnes; inflows and outflows can move the price within days. Futures traders on COMEX add short-term volatility. Retail bar and coin buying tends to spike in crises and slow when prices are high.

6. Geopolitics and fear

Wars, banking crises and political shocks drive 'safe haven' buying. Gold jumped in 2008, again during the 2011 euro crisis, at the onset of COVID-19 in 2020 and after the invasion of Ukraine in 2022. These spikes often fade unless the event also changes interest rates or central bank behaviour.

7. Jewellery and seasonal demand

Jewellery is still close to half of physical demand, led by India and China. Indian buying peaks around Akshaya Tritiya, Dhanteras/Diwali and the wedding season; Chinese buying around Lunar New Year. When prices are very high, jewellery demand falls and scrap selling rises, which can cap rallies.

Supply: why it matters less

Mine output is about 3,600 tonnes a year and grows slowly. Recycled gold adds 1,100–1,400 tonnes and rises when prices are high. Because almost all gold ever mined still exists — roughly 210,000 tonnes — annual supply is small relative to the stock, so supply shocks rarely drive the price the way they do for oil.

What this means for sellers and buyers

If you're selling scrap, day-to-day price moves of 1–2 % are small next to the 20–40 % gap between buyers' payout rates. Get competing quotes first. If you're buying, regular purchases (cost averaging) smooth out volatility better than trying to call the top or bottom. The charts and price-by-year pages show how the drivers above played out historically.

How these drivers interact: three historical episodes

1979–1980: double-digit US inflation, negative real interest rates, the Iranian revolution and the Soviet invasion of Afghanistan all hit at once. Gold rose from about $230 to an intraday $850. When the Federal Reserve under Paul Volcker pushed rates far above inflation, real yields turned sharply positive and gold lost more than half its value over the next two years.

2008–2011: the financial crisis, near-zero interest rates and large-scale bond buying by central banks pushed real yields toward zero and weakened the dollar. Gold rose from under $800 to around $1,920 by September 2011. As the economy recovered and markets began to expect higher rates, gold fell to roughly $1,050 by late 2015.

2022–2025: in 2022 the Fed raised rates at the fastest pace in decades and the dollar surged, which would normally have crushed gold — yet it held up, largely because central banks bought record amounts after Western sanctions froze Russian reserves. When rate cuts came into view, gold broke to successive record highs. This episode shows that official-sector buying can outweigh the classic interest-rate signal for long periods.

The common thread is that gold reacts to changes in expectations, not to news headlines alone. A war or a bank failure moves gold for weeks if it changes what investors expect central banks to do, and only for days if it does not. Watching real yields, the dollar index and reported central-bank purchases explains most of the big moves after the fact — but none of them predicts tomorrow's price with any reliability.

Use our gold price by year pages to see the average, high and low in each of these years, and the charts page to compare multiple time frames.