Since its discovery by the ancient Egyptians several centuries ago, gold has played an essential role in every civilization. It has served as a symbol of wealth and power, being used for ornamental purposes and even as a form of currency. While the prominence of gold as a financial instrument has diminished since the rise of the U.S. dollar as the world reserve currency, it remains a go-to store of value for many individuals.

The gold market, like any other traded commodity, experiences its fair share of ups and downs. Bull runs and bear markets are part and parcel of investor reactions to global financial news. Presently, gold is valued at over $1980, and it has gone through five major price phases to reach its current position.

In recent times, gold prices have held steady around $1,980 per ounce, with a projected growth of over 8% for March. Market participants have made assumptions based on the reduction of global inflation worries and efforts by leading central banks to avert a comprehensive financial crisis. The recent banking instability triggered by the collapse of two regional banks in the US has also contributed to increased demand for gold as a safe-haven asset.

At its most recent gathering in March, the US Federal Reserve implemented a 25 basis point rate hike as expected while hinting at another potential rate hike. However, there is a 40% probability in money markets that rate increases will be suspended in May, with rate reductions anticipated by the end of the year. Investors are now closely monitoring essential US PCE data and statements from various Federal Reserve authorities to better understand the Fed’s future decisions.

Let’s take a closer look at the four main price phases in the history of gold:

1. The price of gold between 1981 and 2000: This period saw one of the worst cycles of price decline for gold. The fall of the USSR and the increasing prestige of the US dollar globally contributed to this downward trend.

2. The price of gold between 2001 and 2010: Gold prices rose significantly during this period due to the US government’s increasing debt and the weakening of the US currency. The September 11, 2001, terrorist attacks in the United States further fueled the upward trajectory of gold prices.

3. The years 2012 to 2015: After more than a decade of continuous growth in gold prices, the upward trend came to an end. Gold prices experienced a steady decline for three consecutive years.

4. The period from 2016 to the present: In recent years, gold prices have shown a promising trend, with only a modest price decline in 2018.

The current price of gold is influenced by various factors, including the demand for the precious metal, the quantity of gold held in central bank reserves, the value of the US dollar, and the desire to hedge against inflation and currency depreciation.

In August 2020, gold reached an all-time high of $2,074.88. This surge was propelled by a combination of factors, including lockdown protocols, the after-effects of Brexit, high tensions leading to the Russian-Ukrainian war, and increased demand for low-risk investments during uncertain times.

Looking back at the past, we find that the gold market experienced a significant spike in the 1970s. During this decade, gold prices soared by 2,300%, mainly due to factors such as double-digit inflation, oil price shocks, a weak currency, and political unrest. Investors turned to gold as a physical repository of wealth amid fear and uncertainty.

The 1980s also witnessed a sharp increase in gold prices. Inflation brought on by high oil prices, the Soviet invasion of Afghanistan, and the effects of the Iranian revolution led investors to flock to gold as a hedge against stagflation.

In summary, the gold market is influenced by geopolitical events, governmental decisions, and market developments. Factors such as inflation, interest rates, and currency rates also play a significant role in determining the price of gold. With the world experiencing extreme inflation in the coming years, experts predict that gold will continue to soar to new record highs.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The precious metals market is highly volatile, and readers should conduct thorough research before making any investment decisions.