Factors That Affect Gold Prices


For years now investors, analysts, and economists have been watching the fluctuations in Gold prices to develop better strategies on how to be profitable and learn best times to be buying precious metals. Here are some factors that can have affect on Gold prices for you to keep in mind for your next precious metals purchase.


One of the most common factors that affect Gold prices is inflation. When governments start printing money into the economy, it devalues the currency as there has been an increase in supply, thus resulting in inflation. Now since Gold cannot be printed or made from thin air, there is a limited supply, which explains why it is so highly valued. So when cash gets inflated, we tend to see a spike upwards in Gold prices as the value of the dollar drops and people want to hedge their wealth against inflation. 

Value of US Dollar

This goes hand in hand with inflation and due to the fact that the US Dollar is seen as a safe haven currency. If there is inflation in the US Dollar, we will see the price of Gold go up. If there is strength in the US Dollar, we will usually see a decline in the price of Gold. Prices of Gold tend to go in the opposite direction of where the US Dollar goes.

Interest Rates

We can see a correlation between Gold and interest rates given out by banks for bonds or savings accounts. Usually when these accounts pay a higher interest, Gold prices tend to drop. When there is a lower interest rate, Gold prices will go up as there is a larger rate of return with Gold. The reasoning behind this comes down to whichever investment would pay the higher rate of return.

Global Crisis

This might be the biggest factor when pricing in on Gold. Whenever there is a worldwide crisis, we typically can expect for Gold prices to go up. Historically this has always been the case because Gold is a safe-haven asset. In 2020 we see Gold reach record highs as a result of the coronavirus pandemic and the impact it left on global economies. Gold’s safe-haven factor spiked up the price in a weak global economy. As countries started recovering and stabilizing, Gold prices inherently dropped.

Gold prices will always fluctuate, that’s a given. If you are buying Gold, there are many factors that you need to take into consideration that will fluctuate the price. The demand for Gold will always fluctuate, however the value of it will remain stable long term. If you are looking to purchase Gold as a hedge against inflation or just as an investment, then check out Au Bullion! We have a wide assortment of Gold products for you to choose from for your next investment!