Today, however, experts say it is becoming a strategic tool influenced by geopolitics, central banks, and the currency rivalries of major powers. Filip Horáček, Sales Director at IBIS InGold explains why the price of gold does not always react as expected, and why more and more investors are returning to precious metals.

Many investors assume that, when global tensions rise, gold will automatically surge in price. In reality, according to Filip Horáček, the relationship is more complex. A whole chain of factors – ranging from oil and interest rates to the strength of the US dollar – feeds into the price of a single ounce of gold traded in London.

“When the price of oil rises, it pushes up inflation. Central banks then raise interest rates and investors shift money into bonds. This strengthens the US dollar and puts gold under pressure,” the expert explains.

A strong dollar is indeed one of the most significant factors. Gold and the US currency have historically moved in opposite directions. “When the dollar strengthens, gold usually weakens. When the dollar falls, gold has room to grow,” Horáček says.

The situation is further complicated by investor behaviour during major crises. In times of heightened uncertainty, some investors also sell gold in the short term, often because they need liquidity, want to cash in profits, or have losses to cover on other markets. That is why the price of gold may temporarily drop, even when geopolitical tensions are rising.

“There is never just one factor at play on the market. It is a mix of rules that carry different weight at different moments,” adds Horáček.

 

Gold is turning into a strategic tool

According to the expert, the very role of gold in the global economy is also changing. Whereas it was once primarily a hedge against inflation, central banks now buy it as a strategic asset.

“Gold is no longer just a portfolio diversifier. It is starting to act as a currency and a geopolitical tool,” Horáček notes.

Demand for gold is being driven in particular by central banks. They accelerated their purchases fast after 2022, and analysts say this is one of the largest surges in interest since the Second World War. The underlying reasons are uncertainty in the global economy and the efforts of many countries to reduce their dependence on the US dollar.

“Governments and central banks today are looking for an asset that can maintain trust regardless of political or currency changes. Money can be created in vast quantities, but gold remains a naturally limited asset,” Horáček points out.

This is why many large financial institutions anticipate that the importance of gold will continue to grow in the years ahead. In their forecasts, JPMorgan and Bank of America predict that gold could pass the $6,000-per-ounce mark in the near future. Analysts highlight the ongoing purchases by central banks, the rising indebtedness of governments around the world, and geopolitical uncertainty, which are underpinning demand for gold over the long term.

However, Horáček believes that gold should be viewed mainly as a long-term portfolio fixture, rather than a quick punt. “We recommend investing in gold for at least five years, and ideally for ten to twenty years. That is when it truly comes into its own as a stabiliser.”

Investor psychology plays a major role in this. “When the price of gold goes up, lots of people buy out of a fear of missing out. Conversely, when it drops, they often panic and sell. But that’s exactly where regular investing helps: it takes the emotion out of the equation and lets you build up a position gradually, without trying to second-guess short-term market swings.”

Today, there are options that allow you to invest in gold regularly and in smaller amounts, without requiring a large lump sum of capital. This means gold can serve as a long-term, stabilising anchor in a modern investment portfolio.

 

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