Four things move the gold price

Every asset that produces cash can be valued by discounting that cash. Gold produces none, which is why analysts find it uncomfortable and why the price is driven by relative attractiveness rather than intrinsic value. Four forces do most of the work.

One: real interest rates

The cost of holding gold is the interest you did not earn elsewhere. When inflation-adjusted yields on government bonds are high, that cost is high and gold struggles. When real yields fall or turn negative, holding an asset that yields nothing costs nothing, and gold usually rises.

This relationship held tightly for decades and loosened after 2022, when gold rose while real yields were also rising. The usual explanation is that the second driver took over.

Two: central banks

Central banks have been persistent net buyers since 2022, at a pace well above the previous decade. The trigger is generally understood to be the freezing of a major country's foreign reserves, which demonstrated that reserves held in another country's currency are a claim that can be cancelled. Gold in a vault at home cannot be.

This demand is different in kind from investment demand. It is policy-driven, price-insensitive and slow to reverse. It is the best explanation for why gold decoupled from real yields, and it is reported monthly if you want to follow it.

Three: the dollar

Gold is quoted in dollars, so a weaker dollar mechanically raises the price in dollars while leaving it unchanged in other currencies. Anyone outside the dollar area should check the price in their own currency before concluding anything, which is why our converter shows four.

A euro investor in some years has watched gold rise in dollars and fall in euros. That is not a subtlety; it is the whole return.

Four: fear, which is real but short

Wars, banking stress and fiscal panics produce sharp rallies. They also fade. Positioning in futures markets shows this clearly: speculative length builds during a crisis and unwinds afterwards, often leaving the price where it started. Crisis rallies are tradeable and are not what drives the multi-year trend.

What barely matters

Mine supply. Production changes by low single-digit percentages a year and a new mine takes a decade, so supply is effectively fixed on any relevant horizon. Jewellery demand matters for the level in some markets and is price-elastic, which makes it a shock absorber rather than a driver. Industrial use is small.

This is the opposite of most commodities, where supply shocks dominate. For gold, it is almost all demand.

How to own it

Coins and bars carry a premium over spot of a few percent, more for small units, and you store and insure them. Physically backed funds charge a small annual fee, track spot closely and are a financial instrument inside the system you may be hedging against. Mining shares are leveraged to the price and add operational, political and management risk, and they frequently underperform the metal in a rising market.

The premium on small coins is worth checking before buying. A one-gram bar can carry a premium that takes years of price appreciation to recover.

What to watch

Watch monthly central bank purchase data. Watch real yields on inflation-linked government bonds, which are published daily. And watch the price in your own currency, not in dollars.