Gold as an investment
Gold, alongside platinum and silver, is highly popular among precious metals as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets.
Gold price
Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I. After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last major currency to be divorced from gold was the Swiss franc in 2000.Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world. The following table sets out the gold price versus various assets and key statistics at five-year intervals.
Influencing factors
Like most commodities, the price of gold is driven by supply and demand, including speculative demand. However, unlike most other commodities, saving and disposal play larger roles in affecting its price than its consumption. Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewelry, with little value over its fine weight, hence it is nearly as liquid as bullion, and can come back onto the gold market. At the end of 2006, it was estimated that all the gold ever mined totaled.Given the huge quantity of gold stored above ground compared to the annual production, the price of gold is mainly affected by changes in sentiment, which affects market supply and demand equally, rather than on changes in annual production. According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tonnes. About 2,000 tonnes goes into jewelry, industrial and dental production, and around 500 tonnes goes to retail investors and exchange-traded gold funds.
Central banks
Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2004, central banks and official organizations held 19% of all above-ground gold as official gold reserves. The ten-year Washington Agreement on Gold, which dates from September 1999, limited gold sales by its members to less than 400 tonnes a year. In 2009, this agreement was extended for five years, with a limit of 500 tonnes. European central banks, such as the Bank of England and the Swiss National Bank, have been key sellers of gold over this period. In 2014, the agreement was extended another five years at 400 tonnes per year. In 2019 the agreement was not extended again.Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005. In early 2006, China, which only holds 1.3% of its reserves in gold, announced that it was looking for ways to improve the returns on its official reserves. Some bulls hope that this signals that China might reposition more of its holdings into gold, in line with other central banks. Chinese investors began pursuing investment in gold as an alternative to investment in the Euro after the beginning of the Eurozone crisis in 2011. China has since become the world's top gold consumer as of 2013.
The price of gold can be influenced by a number of macroeconomic variables. Such variables include the price of oil, the use of quantitative easing, currency exchange rate movements and returns on equity markets.
Hedge against inflation
Gold, similar to other precious metals such as platinum and silver, may be used as a hedge against inflation or currency devaluation.| USD/oz | |
| In real terms | 725 |
| In real terms | 770 |
| Relative to per capita income | 800 |
| Relative to the S&P500 | 900 |
| Versus copper | 1050 |
| Versus crude oil | 1400 |
Jewelry and industrial demand
consistently accounts for over two-thirds of annual gold demand. India is the largest consumer in volume terms, accounting for 27% of demand in 2009, followed by China and the USA.Industrial, dental and medical uses account for around 12% of gold demand. Gold has high thermal and electrical conductivity properties, along with a high resistance to corrosion and bacterial colonization. Jewelry and industrial demand have fluctuated over the past few years due to the steady expansion in emerging markets of middle classes aspiring to Western lifestyles, offset by the 2008 financial crisis.
War, invasion and national emergency
When dollars were fully convertible into gold via the gold standard, both were regarded as money. However, many people preferred to carry around paper banknotes rather than the somewhat heavier and less divisible gold coins. If people feared their bank would fail, a bank run might result. This happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and issue Executive Order 6102 outlawing the "hoarding" of gold by US citizens. There was only one prosecution under the order, and in that case the order was ruled invalid by federal judge John M. Woolsey, on the technical grounds that the order was signed by the President, not the Secretary of the Treasury as required.Gold prices surged to a near two-month high in June 2025, driven by heightened geopolitical tensions between Israel and Iran, prompting investors to seek refuge in safe-haven assets like gold and platinum.
Gold fatigue
At times, the price of gold rises so high that interest wanes, as other investments such as platinum are perceived as better value. During periods of "gold fatigue", investors seek alternative assets including silver, platinum, or non-metal assets such as Bitcoin. The price of platinum rose 44% in early 2025 in part due to gold fatigue, with investors fleeing gold toward platinum, and some sources predicting that platinum would reach $4,000 per ounce before gold does so.Dollar alternative
During October 2025, gold prices increased above $4,000 per troy ounce for the first time after increasing more than 50% in the year—the highest yearly increase since the inflationary shock of 1979. According to CME Group, the weakening US dollar, rising US treasury yields, stubborn inflation, robust central bank demand and geopolitical risks help underpin the appreciation.Investment vehicles
Bars
The most traditional way of investing in gold is by buying bullion gold bars. In some countries, like Canada, Austria, Liechtenstein and Switzerland, these can easily be bought or sold at the major banks. Alternatively, there are bullion dealers that provide the same service. Bars are available in various sizes. For example, in Europe, Good Delivery bars are approximately. bars are also popular, although many other weights exist, such as the,, 10 g, 100 g, 1 kg, 1 tael, and 1 tola.Bars generally carry lower price premiums than gold bullion coins. However larger bars carry an increased risk of forgery due to their less stringent parameters for appearance. While bullion coins can be easily weighed and measured against known values to confirm their veracity, most bars cannot, and gold buyers often have bars re-assayed. Larger bars also have a greater volume in which to create a partial forgery using a tungsten-filled cavity, which may not be revealed by an assay. Tungsten is ideal for this purpose because it is much less expensive than gold, but has the same density.
Good delivery bars that are held within the London bullion market system each have a verifiable chain of custody, beginning with the refiner and assayer, and continuing through storage in LBMA recognized vaults. Bars within the LBMA system can be bought and sold easily. If a bar is removed from the vaults and stored outside of the chain of integrity, for example stored at home or in a private vault, it will have to be re-assayed before it can be returned to the LBMA chain. This process is described under the LBMA's "Good Delivery Rules".
The LBMA "traceable chain of custody" includes refiners as well as vaults. Both have to meet their strict guidelines. Bullion products from these trusted refiners are traded at face value by LBMA members without assay testing. By buying bullion from an LBMA member dealer and storing it in an LBMA recognized vault, customers avoid the need of re-assaying or the inconvenience in time and expense it would cost. However this is not 100% sure; for example, Venezuela moved its gold because of the political risk for them. And as the past shows, there may be risk even in countries considered democratic and stable; for example in the US in the 1930s gold was seized by the government and legal moving was banned.
Efforts to combat gold bar counterfeiting include kinebars which employ a unique holographic technology and are manufactured by the Argor-Heraeus refinery in Switzerland.
Coins
s are a common way of owning gold. Bullion coins are priced according to their fine weight, plus a small premium based on supply and demand. The sizes of bullion coins range from, with the size being most popular and readily available.Common gold bullion coins include the Krugerrand, Australian Gold Nugget, Austrian Philharmoniker, Austrian 100 Corona, Canadian Gold Maple Leaf, Chinese Gold Panda, Malaysian Kijang Emas, French Napoleon or Louis d'Or, Mexican Gold 50 Peso, British Sovereign, American Gold Eagle, and American Buffalo.
Coins may be purchased from a variety of dealers both large and small. Fake gold coins are common and are usually made of gold-layered alloys.