A price set by sentiment and money, not by earnings
Gold produces no income, so its price depends on what investors are willing to pay to hold it. That makes it react strongly to anything that changes the appeal of other assets: interest rates, currencies and risk.
Real interest rates
The most consistent relationship is with real yields, meaning bond yields after inflation. When real yields fall, the cost of holding a non-yielding asset drops and gold tends to rise. When they climb, gold usually struggles.
The US dollar
Gold is quoted in dollars. A weaker dollar makes it cheaper in other currencies, which tends to lift demand and the dollar price. A stronger dollar often has the opposite effect.
Central banks and official demand
Central banks hold gold as a reserve asset. Large purchases or sales change the supply and demand balance and signal how policymakers view the dollar and other reserves.
Safe-haven buying
In periods of market stress or geopolitical tension, investors often add gold. The effect is not automatic: in sudden liquidity crises gold can fall together with other assets before recovering.
Physical demand
Jewellery and bar-and-coin demand, particularly in India and China, follows local prices, festivals and income. High prices can reduce jewellery buying while attracting investment buying.
Educational content, not investment advice.