Global Gold Prices and Their Volatility: A Theoretical Approach and Analytical Reading" Review Article"

Abstract

This review aims to provide a comprehensive analytical framework for understanding the dynamics of global gold prices by combining theoretical approaches and applied interpretations of their historical trajectories and temporal trends. The research begins by reviewing the intellectual foundations that have addressed gold price behaviour, focusing on its role as a haven, an inflation hedge, and a store of value, as well as its sensitivity to real interest rates, the US dollar exchange rate, geopolitical fluctuations, and business cycles. In this context, the article seeks to highlight the extent to which these theoretical frameworks can explain the non-linear and volatile movements of gold prices over time. The article also presents a temporal analysis of the evolution of global gold prices from 1915 to March 2026, observing patterns of volatility and the transitions between long-term periods of relative stability and short-term sharp price increases. This analysis demonstrates that gold prices do not move randomly, but are influenced by a complex and intertwined array of economic, financial, and geopolitical factors. The effects of these factors are reflected through the forces of supply and demand. A unique characteristic of gold, compared to other commodities, is that the decisions of central banks and investors regarding holding or selling it have a greater impact than actual consumption in determining its price. The article's significance lies in its explanation of the recent historical surges in gold prices, particularly during the period 2020-2026, which witnessed unprecedented increases driven by rising inflation rates, fluctuating real interest rates, and increasing global uncertainty. The article concludes that the dynamic interaction between these factors, with their relative weights varying over time, determines the upward and downward trends in gold prices, with an upward trend predominating during times of crisis. Based on a theoretical and analytical review, the article affirms that gold retains its characteristics as a hedge and safe haven during periods of turmoil. However, these characteristics may diminish with the stabilization of global economic and financial conditions, allowing it to revert to its nature as an asset that does not generate a fixed return. Therefore, understanding the dynamics of gold prices requires adopting an integrated approach that combines theoretical analysis and time-based monitoring, which contributes to supporting the decisions of investors and policymakers in an environment characterized by a high degree of uncertainty.