Published 4 October 2025
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.
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.
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 toward gold.
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.