Last Updated: August 14, 2026
The price of gold fluctuates daily, rising and falling like the tides. But unlike the ocean, gold prices aren’t controlled by the moon – they’re influenced by a complex combination of factors, from interest rates and supply and demand to geopolitical events and investor sentiment.
Gold is unique because it’s both a commodity and an investment asset. Whether you’re buying or selling gold, understanding what drives price movements can help you make more informed decisions when it comes to your metal.
Monetary Policy
Some analysts consider U.S. Federal Reserve policy to be one of the biggest drivers of gold prices. The general theory is that when the Fed raises interest rates, it can put downward pressure on gold prices. This is because higher interest rates make interest-bearing investments, such as savings accounts and bonds, more attractive. Since gold doesn’t pay interest or dividends, some investors may choose to move their money into those assets instead. As demand for gold falls, its price may decline.
However, the relationship between interest rates and gold prices is not always straightforward. A study from the National Bureau of Economic Research found that the two don’t always move in opposite directions. During much of the 1970s, for example, U.S. interest rates rose sharply – but so did the price of gold.
One reason is that interest rates are only one piece of the gold price puzzle. If rising interest rates contribute to economic uncertainty or a weaker stock market, investors may still turn to gold as a safe-haven asset. For example, gold prices rose more than 60% in 1973 and 1974 while interest rates increased and the S&P 500 fell by more than 20%.
Supply
Gold is unique compared to other commodities, but at the end of the day, it’s still a commodity -meaning supply and demand play an important role in determining its price.
Because so much gold already exists above ground, new mining only adds a small amount to the total supply each year (roughly 2-3%). As a result, changes in mine production typically have less immediate impact on gold prices than changes in demand and investor sentiment.
That said, shifts in production levels, whether due to discoveries, technological advances, or regulatory constraints, can still influence prices. For example: stricter environmental regulations and increasing extraction costs have made new mining more challenging, potentially limiting future supply growth.
Demand
Demand for gold comes from several sources, including jewelry, technology, central banks, and investors. Among these, investment demand can have a particularly strong influence on prices because it often changes in response to economic uncertainty and market conditions.
The COVID-19 pandemic provides a clear example. In 2020, global gold demand declined by about 14% from the previous year, largely due to reduced jewelry and technology demand. This marked the first time demand fell below 4,000 tons since 2009, according to the World Gold Council.
Despite this decline, gold prices surged more than 25%, reaching a record high of $2,067.15 per ounce in August. Investor demand soared as concerns about political instability, economic uncertainty, and stock market volatility drove record inflows into gold ETFs. (Gold ETFs are basically funds that can be bought and sold like stocks, allowing investors to gain exposure to gold without having to buy and store physical gold.)
Central Bank Buying
Central banks hold about a fifth of all the gold that’s ever been mined, using the metal to help strengthen and diversify their financial reserves.
When central banks purchase large amounts of gold, it can push prices higher by reducing available supply and reinforcing confidence in the metal worldwide.
Central banks have been aggressively buying gold in recent years – so much that it’s reshaping the global market. Countries like Russia, China, Brazil, and India have increased their gold holdings as part of broader efforts to diversify their foreign exchange reserves.
Geopolitical Events and Safe Haven Appeal
Gold has a millennia-long track record as a reliable store of value, and it’s been viewed as a safe haven asset by investors for centuries. Because gold has a low correlation with many other asset classes (especially stocks and bonds), it can be an attractive way to diversify a portfolio.
During periods of uncertainty – whether it’s caused by war, rising inflation, economic instability, or a volatile stock market – many investors become more cautious. Rather than keeping all of their money in assets that may fluctuate sharply, some shift part of their portfolios into gold. As demand increases, gold prices often rise too.
That said, gold isn’t guaranteed to move higher every time there’s a geopolitical event or market downturn. But because investors often view gold as a relatively stable store of value, uncertainty has historically been one of the biggest drivers of demand.
Investing in Gold
Whether you’re interested in buying physical gold or investing through mining stocks or gold ETFs, investing in precious metals can be a smart way to diversify your wealth. Gold coins and bars come in a wide variety of designs and sizes, so you can choose which items best fit your budget and investment goals. When selecting a bullion vendor, ensure that the company’s credibility is confirmed by a substantial number of positive customer reviews. Your bullion dealer should also have a transparent and fair buyback policy that will allow you to sell your bullion back to them if necessary.
Should I Sell My Gold Now?
Trying to predict the perfect time to sell gold can be tempting, especially when prices are making headlines (which has happened a lot lately). However, even experienced investors struggle to consistently “time the market.” Some businesses that regularly accumulate precious metals (like jewelers, pawnbrokers, dentists and more) choose to sell portions of their gold at regular intervals, rather than waiting for the “perfect” moment. This eliminates any guesswork and can lead to more consistent returns over time.
If you’re an individual seller with a one-time item to sell — inherited jewelry, an old coin collection, or scrap gold — our individual sellers guide covers what to expect before you get started.
If you decide to sell your physical gold, a reputable precious metals refinery like Garfield can help you get the highest return for your items. As one of America’s oldest and most trusted refineries, we take pride in offering industry-leading payouts and award-winning customer service.
Ready to sell your gold, silver, platinum or palladium? Get started today with a free shipping label!
Written by
Allie BowmanAllie Bowman is the Content Lead at Garfield Refining, where she translates more than 130 years of precious metals expertise into clear, accurate, and practical content for individual sellers, dental professionals, jewelers, and collectors. A Dean's List graduate of the University of Delaware's Media Communication program, Allie has built her career around making complex subjects accessible to a broad audience. Her experience spans nutrition science, lifestyle magazine publishing, and precious metals refining, giving her a unique ability to transform technical information into engaging, trustworthy content. At Garfield, Allie brings editorial rigor and subject-matter expertise to every piece she produces. She works closely with Garfield's refining specialists and senior leadership to ensure that technical topics - from karat markings and assay methods to precious metals markets and spot price mechanics - are explained with both accuracy and clarity. Since joining Garfield's marketing team, Allie has written extensively on precious metals refining, dental scrap recovery, gold and silver bullion, estate and inherited jewelry, and industry-specific topics for dental and jewelry professionals. All content is reviewed by Garfield's leadership team prior to publication, ensuring it reflects the company's standards for accuracy, transparency, and industry expertise.
Reviewed by
Morgan KerrisseyMorgan Kerrissey is the President of Garfield Refining, one of North America's most longstanding and trusted precious metals refineries. For over two decades, Morgan has built his career at the intersection of commodities markets, metallurgy, and precious metals — earning a reputation as one of the most knowledgeable voices in the refining industry. Morgan joined Garfield in 2008, bringing rigorous operational discipline to a company built on exacting standards since 1892. Named President in 2014, he has guided Garfield through volatile gold, silver, and palladium markets, while modernizing its workforce and technologies and diversifying its metal supply chains. Under his leadership, Garfield has expanded its refining capabilities across the full lifecycle of precious metals recovery, entered new markets, and expanded services while maintaining the same customer forward approach that has made Garfield a mainstay for more than a century. From hedging strategy to daily refinery operations, Morgan commands high levels of technical depth and market fluency. Morgan grew up outside Boston, graduated from Harvard University, and has lived with his family in Philadelphia, PA for almost 20 years.