Gold prices typically rise during economic uncertainty, high inflation, geopolitical turmoil, and periods of a weakening US dollar, acting as a safe haven; seasonally, January, August, and September are often strong months, while summer (June/July) can see dips, leading to potential buying opportunities. Central bank purchases and expectations of lower interest rates also drive prices up.
Economic & Geopolitical Factors (Long-Term/Event-Driven)
- Inflation: Gold is a hedge against rising prices, so it tends to climb when inflation outpaces interest rates.
- Economic Uncertainty/Recession: During market volatility or fear of recession, investors flee to gold as a reliable store of value.
- Dollar Weakness: A weaker US dollar makes gold cheaper for foreign buyers, increasing demand and price.
- Geopolitical Instability: Conflicts and tensions drive investors to gold as a safe haven, as seen recently with global events.
- Lower Interest Rates: When central banks cut rates, the opportunity cost of holding non-yielding gold decreases, making it more attractive.
