What moves the price of gold?
Gold has no earnings, pays no dividend and produces nothing. Its price still moves for reasons, and understanding them matters more than usual — because with gold, how you hold it changes your outcome as much as the price does.
What tends to move the price
Real interest rates
The most watched relationship. Gold pays no income, so its appeal is often compared against what you could earn risk-free elsewhere after inflation. When real yields fall, the opportunity cost of holding a non-yielding asset falls with them, and vice versa.
This is a tendency rather than a rule. It has held loosely over long periods and broken down for extended stretches, so treating it as a reliable signal is a mistake.
The US dollar
Gold is quoted in dollars internationally, so dollar strength and the gold price often move in opposite directions. Part of that is mechanical rather than a judgement about gold itself: a stronger dollar makes gold more expensive in other currencies.
Central bank and institutional demand
Central banks hold gold as reserves, and their buying and selling is large enough to matter. This demand responds to policy and reserve management over years, not to daily news.
Risk and uncertainty
Gold is often described as a haven, and demand does sometimes rise during stress. It is worth being precise about this: gold has also fallen during crises, including episodes where investors sold whatever they could to raise cash. "Haven" describes a tendency, not a guarantee of behaviour on any given day.
Supply
Mine production and recycling change slowly and rarely drive short-term moves. Most of the volatility comes from the demand side.
How you hold it changes what you own
This is the part that catches people out. These are different instruments with different risks:
| Instrument | What it is | Things to check |
|---|---|---|
| Physical metal | Bars or coins you hold or store | Storage, insurance, dealer spread, verification |
| Physically backed ETF | A fund holding allocated metal | Expense ratio, custody arrangements, redemption terms |
| Futures | A contract to transact later | Leverage, margin calls, expiry and rolling |
| Leveraged products | Daily-reset multiples of a gold index | Decay over time, designed for short holds |
| Mining shares | Companies that produce gold | Company risk, costs, debt — not a pure gold position |
Mining shares in particular are frequently mistaken for gold exposure. They are equity in a business whose profitability depends on the gold price, its own production costs and its balance sheet, and they can fall while gold rises.
Leverage changes the question. With futures or leveraged products, a move against you can force an exit before any longer-term view has a chance to be right or wrong. "I plan to hold for years" and "I am using leverage" are difficult to hold at once.
What gold does not do
- It does not pay you to wait. No dividend, no coupon, and storage or fund costs are ongoing.
- It is not a guaranteed inflation hedge. It has tracked inflation well over some long periods and poorly over others.
- It is not low-volatility. Gold has had deep, multi-year drawdowns.
- It does not have to recover. Nothing entitles a non-yielding asset to return to a previous high on any timescale.
Before a practice trade in gold
Write down which instrument you are modelling, how long you expect to hold it, what would make you exit, and how much you could lose. Those four answers differ enormously between spot metal and a leveraged futures position, even though both appear as "gold" on a chart.
Reading the source
For a physically backed gold ETF, the issuer sets out the objective, costs and risks in full. For GLD that is State Street: GLD's objectives and risks. Terms change; the issuer's current document is the authority.
Chart gold in the research deskNext
What is an ETF covers the fund structure in more depth, and how to start paper trading covers practising in a market that is new to you.