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Spot gold refers to the current price at which gold can be bought or sold for immediate delivery. This price is determined by the live market conditions and reflects the current supply and demand for gold.
Gold is often used as a hedge against inflation because its value tends to rise when the cost of living increases. Investors buy gold during inflationary periods to protect their purchasing power, which can lead to higher gold prices.
Gold prices are influenced by a variety of factors including market demand and supply, geopolitical events, inflation rates, and changes in currency values. For instance, during periods of high inflation or economic uncertainty, gold prices often rise as investors seek a safe-haven asset. Conversely, when the economy is stable, gold prices might decline as investors move towards riskier assets like stocks.
Gold prices tend to climb when economic uncertainty, inflation concerns, and geopolitical tensions push investors toward safe assets. Historically, gold moved from about $700 per ounce in 2008 to over $1,900 by 2011 as the financial crisis unfolded. It also rose sharply during the COVID-19 pandemic, topping $2,000 per ounce in 2020 as markets seized up.
The most recent surge has been especially strong. After hovering around $2,600–$2,700 in late 2024, gold broke higher in 2025, moving through $3,000 early in the year and reaching above $4,400 per ounce by year-end. Spot prices have even approached the $4,500+ area in early 2026, reflecting continued demand for safe-haven assets.
Drivers in 2024–2025 have included persistent inflation pressures and expectations of interest rate cuts by major central banks, which reduce the opportunity cost of holding non-yielding gold. Central bank buying also stayed firm, with many nations expanding reserves as a hedge against currency volatility.
Geopolitics remain a factor as well. Ongoing tensions around the Russia-Ukraine war and conflicts in the Middle East have kept risk premiums elevated, pushing investors toward gold as a store of value. Combined with macroeconomic uncertainty about growth and debt, this mix helped sustain gold’s rally into 2025.
Volatility of gold is driven by factors such as changes in monetary policy, geopolitical events, and fluctuations in the value of the US dollar. For example, when the Federal Reserve changes interest rates, it can lead to aggressive price movements in gold.
Additionally, geopolitical tensions, like conflicts in major economies, can cause investors to flock to gold, increasing its volatility. Since gold is typically priced in US dollars, fluctuations in the dollar's value can impact prices.
A stronger dollar makes gold more expensive for foreign investors, potentially reducing demand and lowering prices, while a weaker dollar can have the opposite effect.
Starting your gold trading journey with zForex is simple:
Gold can be invested in various forms, including physical gold (bullion and coins), gold ETFs, gold mining stocks, and gold futures. Each form has its own risk and return possibility.
The dollar index slipped below 97 as markets awaited delayed January jobs data, with weak retail sales and reports of China urging banks to cut US Treasury exposure adding pressure on the currency.
The dollar index stayed under pressure on Tuesday as fears of softer foreign demand for US assets, reports of Chinese banks cutting Treasury holdings, expectations of delayed US jobs and inflation data, and a firmer yen on intervention talk weighed on the greenback.
The dollar index slipped to around 97.5 as delayed U.S. data due to the shutdown kept markets cautious, with investors expecting steady Fed policy until summer while risk appetite and Japan’s election added pressure against the yen.
Global markets turned cautious on Friday as risk sentiment weakened, led by a sharp drop in U.S. tech futures after Amazon’s heavy AI spending plans rattled investors.
Markets tilted in favor of the US dollar after strong services data reinforced concerns over persistent inflation.
The dollar index held near 97.4 on Wednesday, pausing its recent advance as the partial US government shutdown postponed key economic releases and kept traders cautious.
The US 10-year Treasury yield held near 4.27% as strong manufacturing data and Kevin Warsh’s hawkish Fed nomination supported growth confidence, while a partial government shutdown threatened to delay the upcoming jobs report.
Precious metals face heavy pressure as markets pivot to a less dovish view of Kevin Warsh’s Fed nomination, strengthening the dollar. This selloff is intensified by CME Group raising margin requirements, forcing leveraged liquidations and accelerating the retreat for gold and silver.
A modest recovery in the U.S. dollar weighed on major currencies and precious metals into the end of the week.
The dollar index steadied above 96 after hitting a four-year low, supported by Treasury Secretary Scott Bessent’s reaffirmation of a strong dollar policy despite earlier signals favoring a weaker currency.
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