Gold typically performs well during periods of uncertainty. If investors have concerns over systemic risks, political turmoil, or stock market volatility, they will often turn to gold for its safe haven credentials, which pushes up its price.
Historically gold has been a hedge against rising prices as inflation tends to lift its value when fiat currencies lose their purchasing power. In a disinflationary environment, gold sometimes declines in price.
Gold is highly influenced by monetary factors, particularly the strength of the US Dollar (USD). When the US Dollar increases relative to other currencies, the price of gold in USD tends to fall and vice versa.
Investor sentiment
Inflation
US Dollar strength
Interest rate environment
We have identified an inverse relationship between nominal yields on 10-year US Treasuries and the price of gold, meaning that the price of gold often rises when interest rates are falling, and falls in price when interest rates are rising.