Volatile Year for Gold Prices

Gold surges to over $5,500 per ounce before dramatic correction

Published on Feb. 8, 2026

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The past year has been anything but predictable for gold investors. The precious metal surged to over $5,500 per ounce before experiencing a dramatic correction, currently leveling off around the $5,000 mark. This volatility is driven by factors like the declining value of the US dollar, the rise of retail investors, geopolitical uncertainty, and concerns about the Federal Reserve's independence.

Why it matters

Gold's price swings have significant implications for investors, central banks, and the broader economy. The metal's status as a safe-haven asset means its performance is closely tied to global economic and political stability. Understanding the drivers behind gold's volatility can help investors make more informed decisions and policymakers assess the broader economic landscape.

The details

A key factor influencing gold's price is the value of the US dollar, which has steadily weakened over the past year. As gold is priced in dollars, a weaker dollar makes it more attractive to international buyers, boosting demand and pushing up prices. The increasing participation of retail investors, often influenced by online trends and more prone to speculative behavior, is also playing a significant role in the market's volatility. Geopolitical instability and concerns about the Federal Reserve's independence have further fueled demand for gold as a hedge against currency devaluation.

  • Around a year ago, one euro bought $1.02; now, it's closer to $1.18, even briefly exceeding $1.20 – a level not seen since mid-2021.

The players

Donald Trump

The US President whose economic policies and attempts to influence monetary policy have contributed to uncertainty and volatility in the gold market.

Jerome Powell

The Chair of the US Federal Reserve, whose independence has become a focal point of concern, with the President's attacks and a Department of Justice investigation rattling investors.

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The takeaway

Gold's volatility highlights the complex interplay of factors driving its price, from the value of the US dollar to geopolitical uncertainty and central bank policies. Investors and policymakers must closely monitor these trends to make informed decisions and assess the broader economic implications.