Gold price history

Gold is probably the most recognisable of the precious metals. Owing to its ability to hold value and due to its relative scarcity, it has been utilised in decorative and industrial applications as well as to varying degrees as currency throughout history. Until 1971 all major global currencies were pegged to the USD which in turn was valued in gold. Known as the Bretton-Woods monetary system, this was similar to the previous gold standard. Similar to earlier monetary systems all currencies had a fixed value in terms of gold. This system was ultimately abandoned in 1971 in favour of the current fiat currency system.

Gold historical prices show that while the price can undergo periods of volatility, overall gold tends to increase over time. It has risen in dollar value by more than 545 per cent over the past 20 years, outpacing inflation and many alternative investment options. Ultimately many investors choose gold as a method of diversification, due to its negative correlation with stocks, bonds and real estate. 

Gold historical prices show that the all-time high of $2070.05/oz was reached on August 6, 2020, followed by a gradual decline. In early 2021 gold prices traded within the 52-week range of $1455.40-2075.14 and have an average annual return of 9 per cent since 2006.

What factors affect the price of gold?

Multiple macro-economic factors affect nearly all commodity prices to some degree. These are things such as interest rates, consumer confidence, unemployment and geopolitical dynamics. In the case of the gold price history there are four main factors which have influenced the performance of the commodity. These are:

• Economic expansion  

Regional economic expansion typically causes an increase in the average income of the area. This can lead to increased consumer and industrial demand for gold. When considering the gold price over the past 20 years, substantial economic expansion in countries with huge populations such as China and India have led to huge increases in consumer demand.

• Supply and demand

While the top five gold-producing countries are considered politically stable economies, a huge amount of gold is mined in underdeveloped countries. Political or other external factors can wreak havoc on the production of gold. As an example, the pandemic of 2020 caused many gold mines to cease operations as companies dealt with outbreaks and workers were forced into quarantine. 

• Opportunity cost

Gold prices over the past year illustrate that as other investment options become more or less attractive gold prices will be inversely affected. While gold is considered the ultimate safe haven investment in its traditional form it does not pay interest or dividends.  As yields on other safe haven investments such as government bonds improve, the gold price historical data shows that the price of gold will decrease.

• Risk and uncertainty

Interest rates and overall monetary policy play a huge role in determining the perception of the economy, and the likelihood of inflation. As inflationary pressure increases, the attractiveness of gold as a hedging tool increases.

Why look at historical data?

Traders can view the gold historical prices on the gold price history chart. Analysing historical data can provide valuable information regarding the past performance of the underlying asset, in this case the gold price, during different economic or political scenarios. For example, by looking at gold price historical data during significant economic downturns and comparing them you can gain insight into how the underlying cause of a recession will affect the price differently. Analysing the gold chart history is also a valuable tool for traders looking to perform a more thorough comparison of asset price based on qualitative or quantitative analysis.

Historical data is also a valuable tool in correlating potential future growth with the current price. By comparing the gold price history increases with economic increases you can gain insight into the effect of different industrial trends. Gold is an integral component of electronics manufacturing and as such increasing demand for these devices is likely to put upward pressure on the price. The gold price history graph is also valuable to compare performance with other companies or indexes as well as annual average prices. By reviewing the data, a trader can see that the gold price averaged $1773.73 in 2020 and $1393.34 in 2019.

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Trade Gold - Gold price chart