Gold as an Investment & the Economy

05.10.2026

Topic guide · Updated October 2026

Gold is one of the oldest forms of money and one of the most watched assets in modern markets. Central banks hold it in their reserves, investors use it to diversify, and millions of families buy it to protect their savings. This guide explains the main ideas behind gold as an investment and brings together all our articles on gold, money and the economy.

Gold as money: from the gold standard to today

For centuries, gold coins were money. In the 19th and early 20th centuries, many countries tied their currencies to gold through the gold standard. The system broke down in the 1930s, was partly rebuilt after the Second World War in the Bretton Woods system, and finally ended in 1971, when the United States stopped converting dollars into gold for foreign governments. Since then, the price of gold has been set freely by the market.

What moves the gold price?

The gold price is usually quoted in US dollars per troy ounce (XAU/USD). Several factors influence it:

Interest rates: gold pays no interest, so it often becomes more attractive when real interest rates (rates minus inflation) are low or falling.
The US dollar: a weaker dollar tends to make gold cheaper for buyers in other currencies and can support demand.
Uncertainty: wars, financial crises and political tension often increase demand for gold as a "safe haven".
Central bank buying: official sector demand has become one of the most important drivers of the market.
Jewellery and industrial demand: especially from India and China, the largest consumer markets.

Why central banks buy gold

Central banks have been net buyers of gold every year since 2010 and bought more than 1,000 tonnes a year in 2022–2024. They hold gold because it carries no counterparty risk, cannot be frozen when stored at home, diversifies reserves away from the US dollar and has kept its value over the long term.

Gold, inflation and crises

Over long periods, gold has preserved purchasing power much better than paper currencies, which lose value through inflation. In the short term, however, gold can be volatile: its price can fall sharply as well as rise. Gold has often performed well during financial crises, but not in every crisis and not at every moment.

Ways to own gold

Physical gold: coins and bars that you own directly.
Gold funds and ETFs: securities backed by gold held in vaults.
Gold mining shares: company shares, which carry business risk in addition to gold price risk.
Jewellery: valued for design as well as metal, usually with a higher premium.

A balanced view

Gold has no yield and its price can move significantly. Many financial planners see it as a long-term store of value and a diversifier rather than a way to get rich quickly. This page is for general information only and is not investment advice; consider your own situation and seek independent advice before investing.

Frequently asked questions

What does XAU/USD mean?

XAU/USD is the price of one troy ounce of gold in US dollars. XAU is the international code for gold.

Does gold always rise in a crisis?

No. Gold has often performed well during financial crises, but its price can also fall sharply in the short term, for example when investors sell assets to raise cash.

Why do central banks buy gold?

To diversify reserves, reduce dependence on any single currency, hold an asset with no counterparty risk that cannot be frozen when stored at home, and preserve value over the long term.

Is gold a good protection against inflation?

Over long periods gold has kept its purchasing power far better than paper money, but over shorter periods its price does not always move in line with inflation.