What Actually Moves Gold Prices? Here Are the 7 Real Drivers

Gold investors often get confused about what really pushes prices up or down. Here’s the honest breakdown:

1. Fed policy & interest rates - This is the heavyweight champion. When rates stay low, bonds suck (returns below inflation), so gold looks better. When rates rise, investors chase yield instead. Simple math.

2. Economic data - Strong economy → Fed might tighten → Gold goes down. Weak data → Fed stays dovish → Gold rallies. Jobs reports, GDP, unemployment all matter.

3. Supply vs demand - Basic econ. 2016 first half: demand up 15% to 2,335 tons, but supply only +1%. Shortage + buying = price go up. Obvious but people ignore it.

4. Inflation levels - Rising inflation = Fed prints money = each dollar worth less = gold worth more (perceived store of value). Works in theory. But 2016 inflation was tame (~1%), which actually capped gold upside.

5. Dollar strength - Gold priced in USD. Weak dollar = gold cheaper for other currencies = global demand rises = prices spike. 2016’s weak dollar was huge for gold bulls.

6. ETF flows - Smallest factor, but real. SPDR Gold Shares ETF buying/selling bullion based on investor demand. 2016 saw cash inflows surge.

7. Geopolitical chaos - Brexit? Trump election? Middle East tensions? Uncertainty drives safe-haven demand. But this one’s pure psychology, hard to measure.

Bottom line: Monetary policy + economic data = 70% of the move. Everything else is noise.