Gold knowledge

What determines the gold price: seven key factors

A short, plain-English tour of the seven things that move the world gold price, and which of them matter most to a UK seller in any given week.

By Rocco Clayfield, trading as GoldPaid; the business incorporated as GOLDPAID LTD (company 17382540) on 5 August 2026 · Published · updated

What are the main things that move the gold price?Seven factors: the strength of the US dollar, real interest rates (after inflation), central-bank purchases, jewellery demand (especially in India and China), mine and recycled supply, geopolitical risk and investment flows through gold ETFs. They interact, none predicts the price reliably on its own, and short-term moves often reflect several at once.

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1. The US dollar

Gold is priced in dollars globally. A weaker dollar typically makes gold cheaper for buyers in other currencies, which tends to lift demand and the dollar price. The opposite holds for a strong dollar. UK sellers feel this indirectly through the pound-dollar exchange rate. Where all seven land on any given morning is a single number that moves with the market, set out on the gold price and selling by post.

2. Real interest rates

Gold pays no interest, so it competes with interest-bearing assets. When real (after-inflation) yields fall, the opportunity cost of holding gold falls and demand tends to rise. Real yields rising tends to be a headwind for gold.

3. Central-bank demand

Central banks have been net buyers of gold for over a decade, with notable pickups in recent years as some have diversified reserves away from the US dollar. This is a structural source of demand that can absorb a meaningful share of new supply. It has not always run this way: through the 1990s the official sector was a persistent seller, which is most of the reason the price bottomed in 1999, as set out in what gold was worth in 1980, 1990 and 2000.

4. Jewellery demand

India and China account for the bulk of global jewellery demand. Indian wedding-season buying and Chinese festival demand are seasonal forces well known to the trade. UK jewellery demand is comparatively small but participates in the same market.

5. Mine and recycled supply

Mine supply grows slowly and is dwarfed by above-ground stocks. Recycled supply, including the postal-buyer market, also feeds the system. Sharp moves in scrap supply tend to track the gold price itself, with more recycling at higher prices.

6. Geopolitical risk

Gold has a long history as a safe-haven asset during war, financial-system stress or major political shocks. Spikes during such events are common but often partly reverse once the immediate fear passes.

7. Investment flows

Gold ETFs and futures positioning can move the price meaningfully in the short term, especially when sentiment shifts quickly. Watching ETF holdings is a common shorthand for tracking professional investor sentiment towards gold.

What to do next

If you want to know what your own pieces are worth, start with a photo rather than a parcel. Send one on WhatsApp and we will tell you plainly what can and cannot be judged from an image. If you go ahead, the items are XRF-tested on arrival and you receive a written offer setting out the purity found, the weight and the rate used. Decline it and the tracked return costs you nothing. Accept it and we aim to pay by Faster Payments within one working hour of your acceptance.

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Common questions

Which factor matters most?

It varies. In quiet macro periods, real yields and ETF flows often dominate the day-to-day. In stress periods, geopolitics and central-bank moves can swamp everything else. Treat the seven factors as a checklist rather than a ranking.

Should I track these factors before selling my own gold?

You can, but you do not need to. For an individual sale of jewellery or scrap, a small short-term move in the price rarely matters as much as choosing a buyer that prices honestly and tests properly.

Is gold a good long-term investment?

We are not investment advisers and cannot answer that for your circumstances. Gold has historically held value over very long periods; how that fits into your situation is a question for a regulated financial adviser.

Not the question you had? The full GoldPaid FAQ covers the rest, from postal cover and ID checks to what happens if you decline the offer.

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