{"id":40717,"date":"2023-05-26T14:53:28","date_gmt":"2023-05-26T14:53:28","guid":{"rendered":"https:\/\/kinesis.money\/?p=40717"},"modified":"2026-02-19T15:16:17","modified_gmt":"2026-02-19T15:16:17","slug":"what-factors-affect-price-gold","status":"publish","type":"post","link":"https:\/\/kinesis.money\/es\/blog\/gold\/what-factors-affect-price-gold\/","title":{"rendered":"What factors affect the price of gold?"},"content":{"rendered":"\n<p>Gold is an economic oddity in that the fundamental physical supply and demand of the precious metal are not the primary drivers of the gold price. Instead the risk sentiment of global markets, alongside the actions of central banks (in particular the US Federal Reserve), are far more significant in determining gold\u2019s direction. <\/p>\n\n\n\n<p>In this article, we\u2019ll explore the different factors that affect the gold price, going through each of them in rough order of importance.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-currency-movements\"><strong>Currency movements<\/strong><\/h2>\n\n\n\n<p>The strength or weakness of the currency an investor is using to view the gold price arguably has the biggest daily impact on the gold price. Most often the gold price is quoted in US Dollar terms, and as such, the relative strength of the greenback against the world\u2019s other major currencies plays a crucial role in driving the gold price up or down.<\/p>\n\n\n\n<p>Gold and the US dollar typically are inversely correlated where a stronger dollar leads to a decline in the gold price while any weakness in the greenback can help lift the precious metal. <\/p>\n\n\n\n<p>While the dollar undoubtedly plays the biggest role in determining the gold price, for gold buyers in some of the biggest physical demand spots in the world such as India, China and Turkey, the relative performance of the rupee, yuan and lira will also impact how cheap or expensive it is to buy gold on the spot market. <\/p>\n\n\n\n<p>As such, there are instances where the gold price might be falling in dollar terms but reaches a record high in another currency due to external factors affecting that country and its economy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Economy<\/strong><\/h2>\n\n\n\n<p>In overly simplistic terms, a strong global economy is detrimental to gold performance while a crisis is fertile ground for the ultimate haven asset. To illustrate this, gold\u2019s highest-ever recorded price &#8211; in excess of $2,000 an ounce &#8211; was achieved in 2020 during the depths of the global pandemic when economies across the world effectively shut down as governments tried to limit the spread of coronavirus.<\/p>\n\n\n\n<p>In Q1 of 2023, the value of gold increased by <a href=\"https:\/\/www.gold.org\/goldhub\/research\/gold-market-commentary-march-2023#:~:text=As%20concerns%20over%20the%20banking,(US%241%2C911%2Foz).\" target=\"_blank\" rel=\"noreferrer noopener\">9.2% to $1,980<\/a> USD per ounce. It was propelled by fears of an economic crisis triggered by events such as the collapse of the Silicon Valley bank, as well as geopolitical tensions.\u00a0<\/p>\n\n\n\n<p>There are many historical examples of gold soaring in value in a turbulent economy. During the 2008 financial crisis, in the month of March, the price of gold reached an all-time record of <a href=\"https:\/\/www.sec.gov\/Archives\/edgar\/data\/1222333\/000095012309004884\/y01039ffwp.htm#:~:text=By%20March%2017%20th%2C%202008,50%25%20in%20just%20nine%20months\" target=\"_blank\" rel=\"noreferrer noopener\">$1,011<\/a> USD per ounce. That meant gold had increased by over 50% in nine months.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Inflation<\/strong><\/h2>\n\n\n\n<p>Inflation has been the talk of markets from the end of 2021 and throughout 2023 as central banks grapple with an issue that has proven far from transitory. Gold\u2019s price reaction during this phase has drilled the heart of the contrasting factors that affect gold. On the one hand, gold would typically benefit at times of high inflation as the asset has proven to be a great store of value over the centuries.<\/p>\n\n\n\n<p>In the United Kingdom, inflation hit a 41-year high of <a href=\"https:\/\/www.ons.gov.uk\/economy\/inflationandpriceindices\/bulletins\/consumerpriceinflation\/april2023#consumer-price-inflation-rates\" target=\"_blank\" rel=\"noreferrer noopener\">11%<\/a> in the year to October 2022. In the year to March 2023, it was measured at 10.1%. As inflation remains high, gold stands out as a particularly attractive investment.<\/p>\n\n\n\n<p>However, gold has struggled to gain in this recently highly inflationary environment due to the policies adopted by central banks across the world to try and bring fast-rising consumer prices back to their targets of about 2%. <\/p>\n\n\n\n<p>The implementation of a series of interest rate hikes by central banks, in particular the Federal Reserve, diminished gold\u2019s appeal as it doesn\u2019t provide any dividend, making interest-paying assets such as bonds more attractive in its place.<\/p>\n\n\n\n<p class=\"has-link-color wp-elements-9147be011737de2e9d7673a8cc1b50e7\">(It\u2019s worth noting that KAU, Kinesis\u2019 <a href=\"https:\/\/kinesis.money\/gold\/\" target=\"_blank\" rel=\"noreferrer noopener\">digital gold<\/a> product, solves that dilemma with a digital currency that generates a usage-based yield while offering the same physical protection that gold offers &#8211; each ounce is backed by a fully-backed and allocated equivalent amount of the physical metal.)<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img width=\"960\" height=\"529\" src=\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_1.png\" alt=\"\" class=\"wp-image-40739\" srcset=\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_1.png 960w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_1-300x165.png 300w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_1-150x83.png 150w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_1-768x423.png 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Uncertainty<\/strong><\/h2>\n\n\n\n<p>Gold benefits at times of uncertainty, particularly when that leads to traders reducing their exposure to riskier assets. The coronavirus pandemic created uncertainty, thus affecting the gold market. From 1st January to 1st May 2020, the value of gold rose by <a href=\"https:\/\/ijeba.com\/journal\/592\/download\/The+Impact+of+COVID-19+on+Gold+Price+Volatility.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">12.85%<\/a> from $1,517.3 to $1,712.39 USD per ounce, outperforming the American dollar.<\/p>\n\n\n\n<p>Gold has shown itself to be a stable asset that has endured over centuries and offers a comfort blanket for money managers when other sectors are struggling. Political uncertainty, concerns over the global economy and conflict, such as Russia\u2019s invasion of Ukraine, are all factors that will typically boost the price of gold.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Hedging and wealth protection<\/strong><\/h2>\n\n\n\n<p>The above factors feed into gold\u2019s integral role as a hedge against declining prices on equity markets. Investors are often encouraged to have up to 10% of their portfolio dedicated to gold as the asset is uncorrelated to equities and therefore gold\u2019s performance can differ from the gains and declines seen in other sectors. <\/p>\n\n\n\n<p>It is worth noting that gold can at times decline alongside equities, but can still be playing a role by its drop being less than that of other markets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Supply and demand<\/strong><\/h2>\n\n\n\n<p>Most of the gold ever mined is still available in some form or another, such as in gold bars in reserves or as items of jewellery. As such, physical demand for the metal alongside factors affecting its supply are considerably lower among the drivers of gold\u2019s price than it would be for most other commodities. <\/p>\n\n\n\n<p>The World Gold Council reported that the demand for gold increased by <a href=\"https:\/\/digitalcommons.buffalostate.edu\/cgi\/viewcontent.cgi?article=1036&amp;context=economics_theses\" target=\"_blank\" rel=\"noreferrer noopener\">15%<\/a> in the first half of 2016 to 2,335 tonnes, and the investment demand increased by 16%. That was the peak demand since 2009.\u00a0<\/p>\n\n\n\n<p>India and China are the world\u2019s two biggest buyers of gold for jewellery, so a big uptick in demand &#8211; particularly for Indian wedding season or Chinese New Year &#8211; or a significant drop from either of these two countries will have an impact on the price. However, these will often by offset by some of the macroeconomic factors outlined above.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Gold production<\/strong><\/h2>\n\n\n\n<p class=\"has-link-color wp-elements-ade76fb9cf360a7a0b122d74391fc7e5\">Rather than gold production being a driver of the gold price, the gold price is a driver for gold production. A sustained high price can encourage investment decisions on exploration for new mines as well as bolster artisanal production. However, to illustrate that the gold price isn\u2019t linked to production, supply in 2021 sank to the lowest level since 2017 yet the price in US dollar terms also declined, according to<a href=\"https:\/\/www.gold.org\/goldhub\/research\/gold-demand-trends\/gold-demand-trends-full-year-2021\" target=\"_blank\" rel=\"noreferrer noopener\"> data<\/a> from the World Gold Council.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Central bank reserves<\/strong><\/h2>\n\n\n\n<p class=\"has-link-color wp-elements-928080026e5772c0d8b56b2bc2655f40\">Gold is a key holding of central banks across the world that have amassed vast reserves of the metal to support their currency and offer a measure of economic stability. <\/p>\n\n\n\n<p class=\"has-link-color wp-elements-6acce599c64ea4b99e70ce959ba48596\">Collectively, central banks<a href=\"https:\/\/www.gold.org\/goldhub\/data\/gold-reserves-by-country\" target=\"_blank\" rel=\"noreferrer noopener\"> hold<\/a> more than 35,000 tons of gold &#8211; which represents about a fifth of the total amount of the metal ever mined. Yet most of the central banks are now rarely active in the market and are instead passively holding onto their reserves for the long term. <\/p>\n\n\n\n<p>Central bank gold buying broke records in 2023 in both emerging and developed markets. In Q1, central bank gold demand reached <a href=\"https:\/\/www.gold.org\/goldhub\/research\/gold-demand-trends\/gold-demand-trends-q1-2023\/Central-banks\" target=\"_blank\" rel=\"noreferrer noopener\">228 tonnes<\/a> which was 34% higher than the previous Q1 record set in 2013.\u00a0<\/p>\n\n\n\n<p>Instead, the bulk of the activity among central banks is now generated by countries such as India, China, Turkey and Kazakhstan, with Russia notably more active in recent times in the build-up to and subsequent invasion of Ukraine that resulted in it being locked out of conventional global markets. The generally static nature of central bank reserves results in the monthly changes proving more interesting from a geopolitical standpoint than as a driver for the price of gold.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>ETFs<\/strong><\/h2>\n\n\n\n<p>Gold-backed exchange-traded funds, or ETFs, are more followers of price than drivers of it with monthly inflows or outflows often mirroring the price action seen in that month. Nonetheless, the amount of gold held within ETFs has grown considerably in the last five to ten years and these products now account for a considerable chunk of investment demand.<\/p>\n\n\n\n<p>The global gold market started the year 2022 on a positive note. According to the World Gold Council, Q1 demand was up <a href=\"https:\/\/www.gold.org\/news-and-events\/press-releases\/gold-remains-resilient-amid-heightened-global-uncertainty\" target=\"_blank\" rel=\"noreferrer noopener\">34%<\/a> year-on-year as the result of strong ETF flows. That solidified gold as a safe haven investment during times of uncertainty and geopolitical tension.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img width=\"960\" height=\"529\" src=\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_2.png\" alt=\"\" class=\"wp-image-40742\" srcset=\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_2.png 960w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_2-300x165.png 300w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_2-150x83.png 150w, https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/BodyImage_2-768x423.png 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why the price of gold matters<\/strong><\/h2>\n\n\n\n<p>The price of gold matters because it is one of the world\u2019s largest investment assets, held in pension schemes, hedge funds and by asset managers as part of millions of individuals&#8217; personal savings and investment accounts.<\/p>\n\n\n\n<p>While gold doesn\u2019t have as much exposure to industry as other metals, its unique blend of qualities makes it a key component in circuit boards for mobile phones, as part of testing kits for illnesses including coronavirus and being used in aerospace. Therefore cost fluctuations will impact these industries.<\/p>\n\n\n\n<p>Finally, the price of gold can be considered an indicator of the health or weakness of the global economy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How to predict the future gold price<\/strong><\/h2>\n\n\n\n<p>Unfortunately, there is no easy way of predicting the future price as gold is subject to multiple different factors that affect its price. Right now, in an environment where central banks are increasing interest rates, it is hard to see gold making significant gains in the short to medium term. Events such as the coronavirus pandemic and Russia\u2019s invasion of Ukraine are also recent reminders of how quickly the status quo can be shaken. <\/p>\n\n\n\n<p>Gold has endured numerous conflicts and crises and is now so embedded in our financial system that it will still be a benchmark price that people seek out on a daily basis many years into the future.&nbsp;Investing in gold can contribute to a healthy investment portfolio which helps protect you against market volatility, inflation and other risks. Take a look at how you can <a href=\"https:\/\/kinesis.money\/\" target=\"_blank\" rel=\"noreferrer noopener\">invest in Gold<\/a> today with Kinesis.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<p> <\/p>\n\n\n\n<p><em><a href=\"https:\/\/twitter.com\/rupertrowling\" target=\"_blank\" rel=\"noreferrer noopener\">Rupert<\/a> is a Market Analyst for <a href=\"https:\/\/kinesis.money\/\" target=\"_blank\" rel=\"noreferrer noopener\">Kinesis Money<\/a>, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in&nbsp;writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.&nbsp;<\/em><\/p>\n\n\n\n<p><em style=\"font-size: revert;color: initial\">As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable&nbsp;energy and the challenges of avoiding greenwash while investing sustainably<\/em><span style=\"font-size: revert;color: initial\">.<\/span><\/p>\n\n\n\n<p><em>This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basi<\/em>s.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gold is an economic oddity in that the fundamental physical supply and demand of the precious metal are not the primary drivers of the gold price. Instead the risk sentiment of global markets, alongside the actions of central banks (in particular the US Federal Reserve), are far more significant in determining gold\u2019s direction. <\/p>\n<p>In this article, we\u2019ll explore the different factors that affect the gold price, going through each of them in rough order of importance.<\/p>\n","protected":false},"author":24,"featured_media":40735,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20,152],"tags":[],"class_list":["post-40717","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-gold"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What factors affect the price of gold? | Kinesis<\/title>\n<meta name=\"description\" content=\"Market analyst Rupert Rowling explores the different factors that can affect the price of gold and how the asset has stood the test of time.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"es_ES\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What factors affect the price of gold?\" \/>\n<meta property=\"og:description\" content=\"Market analyst Rupert Rowling explores the different factors that can affect the price of gold and how the asset has stood the test of time.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/\" \/>\n<meta property=\"og:site_name\" content=\"Kinesis\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-26T14:53:28+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-02-19T15:16:17+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/FeatureImage.png\" \/>\n\t<meta property=\"og:image:width\" content=\"960\" \/>\n\t<meta property=\"og:image:height\" content=\"529\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Rupert Rowling\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:description\" content=\"Market analyst Rupert Rowling explores the different factors that can affect the price of gold and how the asset has stood the test of time.\" \/>\n<meta name=\"twitter:label1\" content=\"Escrito por\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rupert Rowling\" \/>\n\t<meta name=\"twitter:label2\" content=\"Tiempo de lectura\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutos\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/\"},\"author\":{\"name\":\"Rupert Rowling\",\"@id\":\"https:\/\/kinesis.money\/#\/schema\/person\/4ad808b583796a51fa6877721e2a52f4\"},\"headline\":\"What factors affect the price of gold?\",\"datePublished\":\"2023-05-26T14:53:28+00:00\",\"dateModified\":\"2026-02-19T15:16:17+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/\"},\"wordCount\":1786,\"image\":{\"@id\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/kinesis.money\/wp-content\/uploads\/2022\/09\/FeatureImage.png\",\"articleSection\":[\"Blog\",\"Gold\"],\"inLanguage\":\"es\",\"copyrightYear\":\"2023\",\"copyrightHolder\":{\"@id\":\"https:\/\/kinesis.money\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/\",\"url\":\"https:\/\/kinesis.money\/blog\/what-factors-affect-price-gold\/\",\"name\":\"What factors affect the price of gold? 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