What moves the price of gold
The main forces behind gold prices, from real interest rates and the dollar to central bank demand, and the ways to own it.
Gold pays no interest and produces no earnings, so its price rests on what people are willing to pay for a store of value. Several forces show up again and again.
Real yields
A real yield is a bond yield after subtracting expected inflation. When real yields are high, holding a metal that pays nothing costs more in forgone income, which tends to weigh on gold. When real yields are low or negative, that cost shrinks. This is a tendency, not a rule, and it can break down for long stretches.
The US dollar
Gold is priced in dollars worldwide. A stronger dollar makes it more expensive for buyers using other currencies, which can reduce demand. A weaker dollar often has the opposite effect.
Fear and uncertainty
In periods of financial stress or geopolitical tension, some investors move toward gold as a perceived safe asset. The effect is inconsistent: gold has fallen alongside other assets in sharp sell-offs.
Official and jewelry demand
Central banks hold gold in their reserves, and their buying and selling can shift the market. Jewelry and technology use make up a large part of annual demand, especially in some countries.
Ways to own gold
- Physical coins and bars. You hold the metal. Expect dealer premiums over spot, storage and insurance costs, and a spread when you sell.
- Exchange-traded funds. Easy to trade, with an annual fee. Understand whether the fund holds metal or uses futures.
- Futures and options. Leveraged and time-limited.
- Mining stocks. These add company risk, costs and management to the price of the metal.
Risks
Gold can fall by large amounts and stay down for years. It produces no income. Taxes on gold gains can differ from taxes on stocks in some countries, so check the rules where you live.
The metals calculator converts ounces, grams and kilograms and works out the gold/silver ratio.