Disclosure: Silver Price Gold may earn a commission if you open an account through links on this page. This doesn’t change our editorial assessments. See our disclaimer.
Gold has been treated as a store of value for thousands of years, and it still plays that role in modern portfolios. Central banks hold it in reserves, investors buy it when they’re worried about inflation or currency weakness, and traders use futures to take short-term positions. This guide explains what drives gold, the ways to invest, and the costs and risks of each.
What drives the gold price
Real interest rates
Gold pays no interest or dividend. When inflation-adjusted interest rates are high, holding gold has a bigger opportunity cost, and demand tends to soften. When real rates fall, gold usually becomes more attractive. That’s why Federal Reserve decisions are some of the most-watched events for gold traders. See how interest rates affect gold and silver.
The US dollar
Gold is priced in dollars globally. A weaker dollar makes gold cheaper for buyers using other currencies, which can support demand. A stronger dollar often works the other way. The relationship is common but not fixed.
Central bank buying
Central banks have been heavy net buyers of gold in recent years as some diversify away from dollar reserves. That buying is a steady, price-insensitive source of demand. Read more in why central bank gold buying matters.
Risk sentiment and geopolitics
Gold is often called a safe-haven asset. During financial stress, wars or political uncertainty, investors tend to move toward it. Those moves can reverse quickly once the stress fades. Our piece on gold and silver as safe havens covers the history.
Supply and jewelry demand
Mine supply grows slowly, and a large share of gold demand comes from jewelry, especially in China and India. High prices can dampen jewelry buying, which acts as a partial brake on rallies. See gold supply and demand.
Ways to invest in gold
| Method | Typical costs | Liquidity | Who it suits |
|---|---|---|---|
| Physical coins and bars | Dealer premium, storage, insurance | Moderate; depends on dealer | Long-term holders who want direct ownership |
| Physically backed gold ETFs | Annual expense ratio | High, trades like a stock | Investors wanting simple exposure in a brokerage or retirement account |
| Gold futures (COMEX) | Commissions, exchange fees, margin | Very high | Active traders and hedgers who understand leverage |
| Gold mining stocks and ETFs | Trading costs, expense ratio for funds | High | Investors comfortable with company and equity-market risk |
| Gold IRA | Setup, custodian and storage fees | Low to moderate | Retirement savers wanting physical metal in a tax-advantaged account |
New to this? Start with how to buy physical gold and how to choose a gold and silver dealer. Retirement savers can read precious metals in a retirement portfolio.
A note on gold IRAs
Gold IRAs are heavily marketed, and fees vary a lot between providers. Ask for every fee in writing, including setup, annual custodian, storage and the markup on the metal you buy. Be wary of anyone who pressures you to act quickly or roll over retirement savings.
Gold futures contract basics
CME Group’s COMEX lists the benchmark US gold futures. Check current specs and margin on CME Group’s contract page.
| Contract | Symbol | Size | Minimum tick |
|---|---|---|---|
| Gold futures | GC | 100 troy ounces | $0.10 per oz = $10 per contract |
| Micro gold futures | MGC | 10 troy ounces | $0.10 per oz = $1 per contract |
| 1-ounce gold futures | 1OZ | 1 troy ounce | Check CME for current tick |
A $10 move in gold changes a standard GC contract’s value by $1,000, and a micro contract’s by $100. With gold trading at historically high prices, even micro contracts represent meaningful notional value. Size positions carefully.
Most retail futures brokers don’t allow physical delivery, so positions need to be closed or rolled before expiry. Compare broker costs and platforms in our reviews of Interactive Brokers, Charles Schwab, E*TRADE and tastytrade.
Building a gold position
Decide the job gold is doing
Some investors hold gold as insurance against currency weakness or a market crash. Others trade it for short-term moves. The first group usually cares most about low ongoing costs and secure storage. The second cares about commissions, platform speed and margin. Be clear which one you are before choosing a product.
Choose a sensible allocation
Many long-term investors keep precious metals to a modest slice of a diversified portfolio rather than going all in. There’s no single right number. See gold and silver allocation for the common approaches.
Consider averaging in
Buying in regular installments reduces the risk of putting everything in at a short-term peak. See dollar-cost averaging into gold.
Understand the tax treatment
In the US, physical gold and many gold ETFs can be taxed as collectibles, which may mean a higher rate on long-term gains than stocks. Futures have their own rules. Check with a tax professional. Our overview of precious metals tax implications covers the basics.
Frequently asked questions
Is gold a good hedge against inflation?
Over long periods, gold has often held its purchasing power, but its short-term relationship with inflation is inconsistent. It may support a portfolio during inflationary periods. It isn’t guaranteed to rise when inflation does.
Should I buy gold or silver?
Gold is usually steadier and more driven by investment and central bank demand. Silver is more volatile and more tied to industry. Some investors hold both. See should beginners buy gold or silver.
How much does it cost to trade gold futures?
You’ll pay a broker commission per contract per side, plus exchange and NFA fees. Broker commissions currently range from under $1 to about $2.25 per side at the brokers we review. You’ll also need margin in your account.