Factors Behind the Rise in Gold Prices

In recent years, the steady rise in gold prices on global markets has drawn the attention of investors, economists, and ordinary citizens. Historically recognized as a "safe asset," gold sees increased demand during times of economic and geopolitical uncertainty. This article provides an in-depth analysis of the main factors driving the increase in gold prices.

1. Geopolitical Tensions and Global Security
Ongoing geopolitical conflicts worldwide — including the Russia-Ukraine war, instability in the Middle East, and U.S.-China tensions over Taiwan — have driven investors away from traditional assets like the stock market toward safe investment tools such as gold. The economic instability stemming from wars and conflicts has fueled the rise in gold prices.

2. Rising Inflation
In many countries, particularly the U.S. and European nations, inflation rates have reached the highest levels seen in decades. Rising inflation encourages people to seek assets that preserve real value, such as gold. Although central banks' monetary policies aim to curb inflation and interest rates are being raised, demand for gold remains strong.

3. U.S. Dollar and Interest Rates
Gold prices are often linked to the performance of the U.S. dollar. A weakening dollar — meaning it loses value against other currencies — increases the dollar-denominated price of gold. Additionally, the U.S. Federal Reserve's decisions on interest rates affect investor sentiment toward risk. When interest rates are low, non-yielding assets like gold become more attractive.

4. Purchases by Central Banks and Institutional Investors
In recent years, many countries, particularly emerging economies, have increased their gold reserves to diversify their currency holdings. According to the International Monetary Fund (IMF) and the World Bank, countries like China, India, and Russia have accelerated their gold purchases. This additional demand has contributed to rising prices.

5. Concerns About Digital Assets and Financial Technologies
Trust in cryptocurrencies has declined recently. Unexpected crashes in the digital asset market (such as the collapse of major exchanges like FTX) have driven investors back to traditional, physical assets like gold. Furthermore, technological failures and regulatory uncertainties have reduced demand for digital assets, positively affecting gold prices. Read 'Zamin' on Telegram!