4 Facts Behind the Rise in Gold Prices that Investors Need to Know

Jakarta, Pintu News – In recent years, gold prices have shown a significant upward trend. Factors such as global economic instability, central bank policies, and high demand from various sectors have pushed the value of gold to record levels. This article will delve deeper into the four main factors contributing to the rise in gold prices, providing insights for investors and market analysts.

Central Bank Policy

Central banks around the world play an important role in determining the price of gold. Holding about one-fifth of all gold ever mined, their actions in managing reserves have a direct impact on global markets. In recent years, especially in emerging economies, central banks have increased gold purchases, seeking diversification from the US dollar and strengthening their monetary security.

When central banks, such as the Federal Reserve in the United States, decide to buy or sell large amounts of gold, they not only reduce or increase the available supply but also send a signal to the market about confidence in gold as a strategic asset. This often pushes gold prices up, especially during periods of economic uncertainty.

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US Dollar Exchange Rate Fluctuations

Gold prices often show an inverse relationship with the US dollar exchange rate. When the dollar weakens against other major currencies, gold becomes more affordable for investors using those currencies, which can increase demand and push prices up. Conversely, a strengthening dollar is usually associated with falling gold prices.

In addition, interest rate policy in the US also affects gold. With low interest rates, the opportunity cost of holding gold, which earns no interest, becomes lower, making it more attractive to investors. However, when interest rates rise, demand for gold may decrease, although this is not always the case if inflation remains high.

Investor Demand Through ETFs and Investment Funds

Since the early 2000s, investment demand for gold through exchange-traded funds (ETFs) and other investment funds has been a major force in the gold market. These financial products allow investors to gain exposure to the gold price without having to face the logistical challenges of storing and securing physical bullion.

The SPDR Gold Shares ETF (GLD), one of the largest gold ETFs, and its more cost-effective sister fund, GLDM, collectively hold more than 31.6 million ounces of gold-worth more than $90 billion as of the first quarter of 2025. When investors buy shares in gold ETFs, the funds typically buy and hold physical gold to back those shares, creating a direct link between fund flows and physical gold demand.

Implications for Investors and Financial Markets

Understanding the factors that influence the price of gold is key for anyone considering gold as part of their investment portfolio or simply wanting to understand its role in the global financial system. With ever-changing dynamics and wide-ranging influences, gold remains an important asset that offers security and potential returns.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference

• Investopedia. What Drives the Price of Gold. Accessed on October 24, 2025