What affects gold prices, and should I buy gold jewellery now?

When it comes to purchasing your favorite pieces of 916 or 999 gold pieces of jewellery to adorn, the first question that usually comes to peoples’ minds are what is the price of gold now?

While gold jewellery is a valuable and beautiful accessory to adorn upon yourself, gold jewellery is also a type of investment. When purchasing gold jewellery, your price of your jewellery is largely pegged to the prevailing prices of gold and hence it is important for us to know what are the factors that can affect gold prices.

Gold prices can be affected by a variety of factors, including:

Economic and political conditions

Generally, changes in the global economic or political climate can influence the demand for gold. Gold is typically seen as a safe haven asset, and hence during times of economic uncertainty, investors often turn to gold as a storage of value which can increase its demand and drive up its gold prices.

For instance, during the 1970s, the middle eastern crisis (Iranian revolution in 1978, Iran-Iraq war in 1979, Afghanistan invasion by the Soviet Union in 1979) saw extremely heightened activity in gold prices. Between September 1978 and January 1980, gold prices increased almost four times from US$217 an ounce to $850 an ounce.

Most recently of note, the Russia-Ukraine conflict is driving up gold prices.

Interest Rates

Gold prices can also be influenced by changes in interest rates. When interest rates are low, the opportunity cost of holding gold is low. Gold pays no interest and investors are betting on the price appreciation of gold. This means that investors could borrow cheaply to fund their purchases of gold, otherwise known as gold carry trade. In theory now, if interest rates rise, the opportunity cost of holding gold increases, which should cause weakness in gold prices.

Interestingly, the negative correlation between interest rates and the price of gold is not clearly defined and may even be lopsided.  In the early 2000s, on the backdrop of a strong global economy and relatively high interest rates, gold prices still saw a surge in their value.


Inflation impacts gold prices because gold is seen as a tool against inflation. With high inflation, the value of fiat currency decreases, causing investors to turn towards gold as a storage of value. Research has shown that between 1974 and 2008, there were 8 years when US inflation was considered high. During those periods, gold prices rose by an average of 14.9% year over year.

Supply and Demand

Like any commodity, gold prices can be influenced by changes in supply and demand. For instance, if a new technology is discovered to be able to mine gold more easily from the deep recesses of the earth, gold prices may fall as there will be a higher supply of gold.

Should I buy gold jewellery today?

When it comes to buying gold jewellery, the decision is a personal one that depends on your individual circumstances and goals. We do not advocate for gold jewellery to be purchased purely from that of an investment standpoint, as gold prices ultimately fluctuate and can be difficult to predict.

When purchasing gold jewellery, you should also consider its the aesthetic appeal and benefit to you. Gold jewellery is a rising trend in the fashion scene and provides a different look to what you will usually be able to achieve with white gold diamond jewellery. It is also often purchased as a dowry gift for betrothal engagements, in the form of 四点金 Si Dian Jin.

If this is your first time considering to purchase gold jewellery, we recommend you to start with fine evergreen pieces that can form part of your everyday look book. For instance, you may consider a SK 916 Twisted Rope Gold Chain, and a SK 916 Royo Bead Gold Bracelet. These pieces match well against our Asian skin tones, as well as solid office or casual outfits.

Finally, when we look at gold prices in the last two decades, it has seen an astounding appreciation in value. It usually gives customers a sense of relief and confidence that the jewellery purchases they wear, have investment potential and are worth every buck they spend.

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