# Gold > Gold is a safe haven and inflation hedge driven by real rates, the dollar and central banks. Learn gold futures, ETFs, key drivers and how traders approach gold. Source: https://learn.tradelabsai.com/commodities/gold/ Track: Commodities · Level: Intermediate · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Gold", https://learn.tradelabsai.com/commodities/gold/ Gold has been a store of value for thousands of years. Today it is held by central banks, investors, jewellers and industry, and it trades around the clock in London, New York, Shanghai and other centres. Gold pays no interest or dividends, so its price depends on what investors are willing to pay to hold it compared with interest bearing alternatives, and on demand for safety during crises. Understanding these drivers helps explain why gold can rally in very different environments. ## How gold is traded | Instrument | Details | |---|---| | COMEX gold futures (GC) | 100 troy ounces; $0.10 tick = $10 | | Micro gold futures (MGC) | 10 troy ounces | | London OTC market | Physical gold traded between banks; LBMA gold price set twice daily | | Physically backed ETFs | Such as large gold trusts holding bullion in vaults | | Bars and coins | Physical ownership with storage and dealer premiums | | Mining stocks | Leveraged to gold prices, with company risk | ## What drives gold prices ### Real interest rates Because gold yields nothing, the opportunity cost of holding it is the real (inflation adjusted) interest rate. When real yields fall, gold tends to rise; when they rise, gold tends to fall. Traders often compare gold with the yield on 10 year Treasury Inflation Protected Securities (TIPS). See [Interest Rates](https://learn.tradelabsai.com/macro/interest-rates/) and [Treasury Bills, Notes and Bonds](https://learn.tradelabsai.com/bonds-credit/treasury-bills-notes-and-bonds/). **Example: Real yields and gold** From 2019 to mid 2020, the 10 year TIPS yield fell from around +1% to around minus 1% as the Federal Reserve cut rates and inflation expectations recovered. Gold rose from about $1,300 to above $2,000 an ounce in August 2020. In 2022, as real yields rose sharply, gold fell back toward $1,650 despite high inflation. The link is strong over many periods but not fixed; since 2022, heavy central bank buying has kept gold strong even with higher real yields. ### The US dollar Gold is priced in dollars. A weaker dollar makes gold cheaper for buyers using other currencies, which tends to support prices. See [Currency Correlations](https://learn.tradelabsai.com/forex/currency-correlations/). ### Safe haven demand During crises, wars and financial stress, investors often buy gold. It rallied during the 2008 financial crisis aftermath, the European debt crisis and periods of geopolitical tension, though in sharp liquidity crunches, such as March 2020, gold can fall at first as investors sell anything to raise cash. ### Central banks Central banks hold large gold reserves and have been net buyers since 2010. According to the World Gold Council, central bank purchases exceeded 1,000 tonnes a year in 2022 and 2023, among the highest levels on record, led by countries such as China, Poland and Turkey. ### Inflation Gold is often seen as an inflation hedge over very long periods, but its short term relationship with inflation is inconsistent. Real rates usually matter more. See [Inflation](https://learn.tradelabsai.com/macro/inflation/). ### Physical demand Jewellery demand, especially from India and China, and technology uses add to demand. Price dips often draw physical buyers. ## Gold's historical moves | Period | Event | |---|---| | 1971 | US ends dollar convertibility to gold; gold begins to float | | 1980 | Gold peaks near $850 amid high inflation | | 1980 to 2001 | Long bear market, falling below $260 | | 2011 | Peaks above $1,900 after the financial crisis | | 2020 | Above $2,000 for the first time | | 2024 to 2025 | Repeated record highs above $3,000, driven by central bank buying, geopolitics and rate cuts | ## How traders approach gold - **Macro traders** follow real yields, the dollar and central bank policy. See [Macro Trading](https://learn.tradelabsai.com/strategies/macro-trading/). - **Trend followers** trade gold's long trends. See [Trend Following](https://learn.tradelabsai.com/strategies/trend-following/). - **Hedgers** use gold to diversify portfolios. See [Diversification](https://learn.tradelabsai.com/portfolio/diversification/). - **Spread traders** use the gold silver ratio and gold versus mining stocks. See [Silver](https://learn.tradelabsai.com/commodities/silver/). ## Risks - **Long drawdowns:** gold lost more than 60% of its value from 1980 to 2001 in nominal terms. - **No income:** holding gold has an opportunity cost. - **Storage and premiums** for physical gold. - **Leverage** in futures. ## Frequently asked questions ### What drives the price of gold? Mainly real interest rates, the US dollar, safe haven demand, central bank buying and physical demand from jewellery and investment. ### Is gold a good inflation hedge? Over very long periods it has preserved purchasing power, but in the short term its link to inflation is unreliable; real interest rates usually matter more. ### How can I trade gold? Through COMEX gold futures, physically backed ETFs, bars and coins, mining stocks and options. Next, learn about the more volatile precious metal in [Silver](https://learn.tradelabsai.com/commodities/silver/). ## Sources - World Gold Council, [Gold demand trends](https://www.gold.org/goldhub/research/gold-demand-trends) ## Continue learning - Next lesson: [Silver](https://learn.tradelabsai.com/commodities/silver/) - Previous lesson: [Metals Markets](https://learn.tradelabsai.com/commodities/metals-markets/) - Related: [Metals Markets](https://learn.tradelabsai.com/commodities/metals-markets/): Metals markets include precious metals like gold and silver and industrial metals like copper and aluminium. Learn the exchanges, drivers and how metals are traded. - Related: [Silver](https://learn.tradelabsai.com/commodities/silver/): Silver is both a precious and an industrial metal, which makes it more volatile than gold. Learn silver futures, the gold silver ratio and famous squeezes. - Related: [Inflation](https://learn.tradelabsai.com/macro/inflation/): Inflation is the rate at which prices rise over time. Learn its causes, how it is measured, how central banks respond and how it affects stocks, bonds and gold. - Related: [Interest Rates](https://learn.tradelabsai.com/macro/interest-rates/): Interest rates are the price of money and a key driver of asset prices. Learn policy vs market rates, real rates and how rates move stocks, bonds and currencies. - Related: [Hedging](https://learn.tradelabsai.com/markets/hedging/): Hedging means taking a position that offsets the risk of another. Learn how hedges work with options, futures and correlated assets, their costs and limits.