The price of gold is influenced by a complex interplay of economic, geopolitical, and market-related factors. One of the primary drivers is inflation. Gold is often seen as a hedge against inflation; when inflation rises, the value of fiat currencies declines, making gold more attractive as a store of value. Conversely, during periods of low inflation or deflation, gold prices may stagnate or fall.

Interest rates also play a significant role. When central banks raise interest rates, the opportunity cost of holding non-yielding assets like gold increases, often leading to lower gold prices. Conversely, lower interest rates make gold more appealing. The strength of the US dollar is another critical factor, as gold is priced in dollars. A stronger dollar makes gold more expensive for foreign buyers, reducing demand and pushing prices down, while a weaker dollar tends to boost gold prices.

Geopolitical instability and economic uncertainty often drive investors toward gold as a "safe-haven" asset. During crises, such as wars or political unrest, gold prices tend to rise. Additionally, central bank policies, such as gold purchases or sales, can significantly impact prices. Finally, supply and demand dynamics, including jewelry demand, industrial use, and mining output, also influence gold prices, making it a highly sensitive and reactive commodity.