How has the gold price changed over time?

The price of gold has sure been on some journey. With some rollercoasters in the short term, we have seen the price of gold increase consistently over time.

How has the gold price changed over time?

The price of gold, just like every other investable asset, is subject to fluctuation. This all depends on what is happening in the world around it. While it does not move in the same way as most currencies, gold value does go up and down and moves with the times. Throughout history, there has been a significant change in the core value of this precious metal and this guide is here to explore how exactly has the price of gold changed over time.

How Has the gold price changed throughout History?

There have been multiple fluctuations in the price and ultimate value of gold. Currently in November 2022, the value is around £1,500 for a single ounce. 20 years ago, this figure was starkly different at around £380. This is exponential growth over two decades, so what are the reasons behind this gold price trend?

Firstly, the subprime mortgage crisis that began around 2007 lent a hand to the rise in gold prices over time. Any time that there is turbulence in an investment market, regardless of the asset (in this case housing), gold price trends see a surge. This is owing to how reliable it is as an investment. Seen as a safe haven, gold finds its strength most noticeably in times of economic crisis. Unlike other assets, it can never lose its entire value as proven through the many gold price chart models. This sets it apart and signifies value will be retained regardless of external factors and current circumstances.

There was a steady rise from this point up until 2011 when the price per ounce hit around £1175. For the following years, gold would dip slightly and remain stable. This changed again during the UK instability around Brexit in 2020 followed closely by the coronavirus pandemic. Running with the theme of uncertainty, there are always noticeable peaks during key historical events and arguably, the global pandemic that changed the world will be one for the history books.  

Going back further

Moving beyond the last two decades, as shown on a value of gold over time graph, there have always been years where it has performed better than others. 100 years ago, an ounce of gold would fetch around £20 according to historical charts. This was a low point, but there was a clear reason behind the dip: The First World War. In 1914, when the war engulfed major European nations, lots of countries globally effectively withdrew from the gold standard that linked currency directly to the rate of gold. This was a period of economic turmoil as reflected in gold chart prices coupled with instability and warfare and all that, that entails.

Other periods of note were the 1970s when Nixon ended the dollar association with the gold standard, though things bounced back more rapidly after the initial decline here. The 1980s saw some of the biggest prices in gold until this year. It was no longer under government control and political instability around the globe boosted it as a viable investment once more (Afghan invasion, oil prices, and high inflation.)

From these trends, it is ultimately noticeable that gold fluctuates on the gold chart price massively but never fails to be valuable regardless of trends and circumstances.

The significance of the price of gold

Until 1931, the price of gold dictated the value of a currency. This changed during the Great Depression when more people were trading in a tender for actual gold, thus depreciating both the supply and the value of physical gold. To regain some stability in the economy, this whole idea was abandoned. Therefore, gold became less valuable. However, there are key areas where the price of gold remains relevant. The biggest of these is arguably how it holds up against inflation, which in the current climate feels extremely worthy of note.  

Why is gold valuable at all?

The value of gold is largely a human concept. We found it, we liked it, and we branded it as a top-tier valuable metal. That it would grow to have such cultural and economic importance was probably a dream far from reality in the early discovery periods. However, it has shaped societies and founded countries all around the world. Wars have been fought, lives have been lost, and people still hold onto it in modern times as a thing of value.

From the Ancient Egyptian discovery period up until now, it has had quite the journey on the gold prices graph. Whether it is basic psychology, tangible reality, or something else entirely, gold is valuable. It is an investment asset and is used by many banks all over the world to manipulate and forge economical practices in line with the gold price trend.

What Dictates the Price of Gold?

As you can see from a gold prices graph, there are fluctuations to be observed. What causes these and who, if anyone, determines the true value of this metal? It depends on availability, demand, central bank interest, and economic trends like inflation. There were significant moments in history when countries broke away from the gold standard and therefore left turmoil in their wake with regard to currency conversion rates and inflation hostility. Yet, the price of gold is a reflection of the times. Factors such as global conflict, inflation, and interest rates all play a role, as do general interest and market assets.

The significance of inflation

Gold can often be a reliable investment at times of high inflation. It has shone through is as a more appropriate channel to protect income and wealth during times of economic hardship. This is truer than ever considering the current state of economic standards.

The price of gold has changed since it was first discovered in Ancient Egypt. While its value has been built as an almost ethereal being over the course of time, history has shown that its relevance is weighted heavily upon human infatuation, dictation, and societal visionaries. There may yet be a day when the gold supply becomes extinct, in which case the value will rise beyond imagination. For now, it treads a steady course.