Why Is the Gold Price Increasing?

When financial markets opened on January 2, 1970, gold was trading at $35 per troy oz. By September 2025, that figure had risen to more than $3,800. In the first three quarters of 2025, the spot price of gold increased by more than $1,000 per oz. The spot prices of silver and platinum had similarly dramatic spikes in 2025. Prices are continuing to rise as the markets approach 2026.

Why is the gold price increasing so much? And, why are other precious metals like silver and platinum following suit?

There are several reasons for the increasing price of gold over time. This article will take a closer look at why gold prices are increasing in both the short term and throughout recent decades.

Reasons Why the Gold Price Increased Throughout History

Precious metals are scarce. Mines extract new gold, but the supply is limited, and the mining and refining processes are slow and expensive. Because of this, gold has always been a symbol of wealth for the people who could afford it. It has also always been seen as a store of value. Currencies have come and gone, but the gold price has continued to increase.

In some countries, gold was the currency, with people buying and selling things using gold and silver coins. For a while, countries only issued paper currency if they had gold reserves to back the money. This was called the gold standard. However, countries ended this practice in the early 1970s. Though some have called for a return to the gold standard, it has not yet happened. Now, market forces decide currency values.

Gold has also always been a safe haven. During war and other crises, when currencies and financial markets fall in value, gold prices have always increased or remained steady. The stability and risk management factors are major reasons why many people make precious metals, especially physical gold and silver, a part of their portfolio.

A Hedge Against Inflation

Gold has an inverse relationship with the U.S. dollar. When the value of the dollar falls, the spot price of gold increases. There are two different factors at play when this happens.

First, gold is a hedge against inflation. Inflation occurs when prices rise in a given country. When this happens, currencies fall in value because consumers can't buy as much with their money. In other words, the money they have in their bank is losing value. They can purchase precious metals to store this value. When the inflation period ends and the value of currency goes up again, they can sell their gold and silver for dollars again.

The second reason is gold’s relationship with the U.S. dollar. Gold prices are no longer tied to America’s currency, but prices around the world are quoted in U.S. dollars. When the value of the dollar falls, people holding other currencies can buy gold for cheaper. The surge of buying increases demand, which raises the price of gold as the value of the USD falls.

For example, if the Canadian dollar (CAD) increases in value versus the USD, gold becomes cheaper for Canadian investors. They can buy at a discount using Canadian dollars. Then, they can hold or sell when they realize a profit.

Why Is Supply Limited

There are still active gold mining, refining, and minting industries. However, the process of getting bullion from the ground to investors is relatively slow. The limited supply means prices will spike when demand increases due to economic problems, inflation, conflicts, or the loss of value of the dollar.

A Cornerstone of Long-Term Investment

Gold remains extremely popular. In 2024, the World Gold Council found that 85% of professional investors had some sort of gold holdings in their portfolio.

Why is gold so popular? The professionals cited steady returns as the biggest reason for holding precious metals. Some investors also cited liquidity (the ease of buying and selling gold) and portfolio diversification as other reasons.

The Advantages of Physical Gold

Physical gold, silver, and platinum have special advantages. First, they are tangible. Gold can't be manipulated like digital currencies. Also, there is no counterparty risk. Unlike stocks, no single CEO, scandal, or government decision is going to affect the price of gold. Yes, interest rate decisions or other policies, such as mining concessions, could affect gold and silver price forecasts in the short term. However, these may not have a lasting impact on prices.

Experienced and novice investors need to get their gold from reputable dealers like Sprott Money. Why? Investment-grade bullion needs to come from reputable government and private mints that meet purity, weight, and authentication standards. 

Gold Is the King of Risk Management

Gold protects against systemic risk. It can be effective in preserving wealth during a temporary downturn, but it is equally valuable when it comes to major disasters. Gold was tied to the U.S. dollar due to the Bretton Woods agreement, so it did not increase in value during World War II.

However, recent examples, such as the 2008 recession, show gold's value as a risk management tool. Gold went from $865 per troy oz at the end of 2008 to $1,575 by the end of 2011. During the same period, major stock indices like the S&P 500 dropped more than 50%. This is an illustration of the demand for gold during uncertain times and a demonstration of why gold prices increase during economic troubles.

Where to Invest in Gold

Physical gold, along with other precious metals, is a good long-term investment for steady growth, good investment returns, and risk management. Sprott Money, one of the most well-known and respected names in the industry, has a range of investment-grade bullion products. In addition to gold bars and coins, we offer silver and platinum products.

We also buy metals and provide storage if you want to keep your portfolio in a third-party vault to ensure security. Visit Sprott Money to see why we are your all-in-one solution for precious metal investing, selling, and storage.