Gold is still considered the safest investment that can protect asset value from various economic uncertainties and inflation to this day. Gold prices are also regarded as stable and have consistently increased each year.
But do you know the extent of the annual increase in gold prices and the factors influencing it? To learn more, read the detailed article below.
- Extent of Annual Increase in Gold Prices
Treasury analyst Jaza Yusron states that over the past 10 years, the global increase in gold prices has been 12% annually. In Indonesia, gold prices have risen by 68.08% over the past 5 years, equivalent to 8.51% annually.
In fact, in the past year, gold investors have already seen a gain of 18.02%. This figure is calculated based on the gold purchase price on July 31, 2023, and selling it at the buyback price on July 31, 2024.
- Historical Increase in Gold Prices Per Year
- Gold Prices in the 1970s
The 1970s marked the beginning of gold investment growth worldwide. One reason was investors actively storing gold as a reserve against oil crises and monetary policies.
In addition to the above reasons, during this decade, the U.S. President implemented policies that significantly impacted gold prices and the global economy.
At that time, gold was priced at USD 35 per troy ounce and was still the standard for currency exchange against the dollar. However, this led to losses for the United States as it could deplete its gold reserves.
Thus, President Richard Nixon abolished the gold standard for the U.S. dollar.
- Gold Prices in the 1980s
The 1980s experienced significant inflation in the United States due to rising global oil prices. This caused gold prices to soar to USD 850 per troy ounce.
Investors realized that gold could protect their assets from inflation caused by geopolitical conflicts, leading to a surge in demand for gold bullion at that time.
- Gold Prices in the 1990s
In contrast to the previous decade, gold prices in the 1990s fell dramatically to their lowest point of USD 254 per troy ounce.
Several factors contributed to the decline in gold prices during this decade, including low inflation, geopolitical stability, and cautious monetary policies by governments worldwide.
Additionally, technological advancements in mining during the 1990s increased gold supply due to reduced mining costs and easier gold extraction.
- Gold Prices from 2008-2011
During this three-year period, a financial crisis in the United States caused the bond market to stagnate. Investors turned to gold to preserve asset value.
The influx of investors moving their assets to gold resulted in a sharp increase in gold prices to USD 1,800 per troy ounce.
- Gold Prices from 2012-2020
During this period, the global economic crisis began to improve, and other equity investment instruments started offering greater returns compared to gold. Investors shifted towards the stock sector.
This led to a drop in gold prices from USD 1,800 per troy ounce to USD 1,050 per troy ounce. However, this decline did not become a sustained trend.
As global gold prices reached USD 1,100 per troy ounce, they began to rise steadily and eventually reached USD 1,400 per ounce.
- Gold Prices from 2021-Present
In this year, the global COVID-19 pandemic created economic uncertainty worldwide. Everyone rushed to safeguard their assets in gold.
Gold was seen as the safest investment instrument to preserve asset value, resulting in a significant increase in gold prices to USD 1,985 per troy ounce.
After the COVID-19 pandemic ended and the global economy began to stabilize, gold prices have continued to rise annually.
- Factors Driving Annual Gold Price Increases
- Global Economic Conditions
Based on the historical annual increase in gold prices, it can be concluded that global economic conditions greatly influence gold prices. Gold prices rise amidst economic uncertainty.
This is because investors view gold as a safe investment that protects assets from current crises. When global economic conditions are uncertain, demand for gold increases, driving prices up. Conversely, when global economic conditions are stable, gold prices remain stable, and any decline is usually not significant.
However, certain events or occurrences can cause gold prices to fall dramatically, as seen in the 1990s.
- Inflation Rates
Gold, regarded as a safe and stable investment, also resists inflation. When prices of goods rise and currency value weakens, gold can act as a safeguard.
Typically, during an economic crisis in a country, inflation rates increase, and people turn to gold to protect their assets.
This differs from inflation in the United States. When global economic conditions are stable, U.S. inflation rates can impact daily gold prices.
If U.S. inflation rates decrease, the central bank may ease its economic policies and cut interest rates. This makes gold, which does not offer yields, more attractive to investors.
- Market Conditions and Demand
Gold prices also follow market demand and supply principles. When demand exceeds supply, gold prices rise and strengthen.
Conversely, if supply exceeds demand or more people are selling gold than buying it, gold prices will fall.
However, fluctuations in gold prices are normal on a daily basis. This does not significantly impact long-term investment, so the focus remains on the annual increase in gold prices.
From the review above, it’s clear that gold investment remains very promising for the long term due to its stable annual price increases.
So, what are you waiting for? Start investing in gold from just Rp 5,000 with Treasury. Begin your gold investment now to achieve better financial conditions in the future!
