Gold has been significant throughout history, often serving as a medium of value and exchange. Beyond its beauty, precious metals are generally seen as safe haven assets, particularly during turbulent times. In fact, many view gold as a hedge against inflation and currency depreciation, as it’s not tied to a specific issuer or government.

Central banks, often the largest money holders, typically purchase gold to diversify their reserves and bolster economic confidence during troubled periods. For instance, in 2022, central banks amassed 1,136 tonnes of gold, valued at around $70 billion—marking the highest annual purchase on record. Many emerging economies, including China, India, and Türkiye, are rapidly building their gold reserves.

Gold typically moves inversely to the US dollar and US Treasury assets, both considered safe havens. So, when the dollar weakens, gold prices often rise. This allows investors and banks to diversify their portfolios in uncertain times. Conversely, bullish stock markets can pressure gold prices downward, while market downturns tend to support precious metals.

Various factors cause fluctuations in gold prices. For example, fears of geopolitical instability or recessions can spike gold prices due to its safe status. Since gold does not yield returns, it tends to gain value when interest rates are low, although higher rates can weigh it down. Ultimately, the price movements are closely tied to the behavior of the US dollar, as gold is priced in dollars. A strong dollar usually keeps gold prices low, whereas a weaker dollar can encourage rises in gold prices.