Drivers of gold price performance

Gold is often used as a safe-haven asset since gold’s price performance often rallies during periods of uncertainty. 

Gold is both pro-cyclical and counter-cyclical. Investment drivers tend to influence heavily short- and medium-term gold price performance. But long-term price dynamics respond to consumer demand, long-term savings, central bank demand, and supply dynamics. 

The factors that influence gold can be grouped into four big themes:

  • Currencies – strength and weakness of the US dollar and various currencies
  • Economic growth and market uncertainty – inflation, interest rates, income growth, consumer confidence, tail risks
  • Tactical flows – price momentum, derivatives positioning 
  • Additional gold demand and supply dynamics – mine production, idiosyncratic demand-side shocks.