Gold prices have risen in the global market for 3 reasons, histor

The price of gold in the international market has not been able to move forward after reaching a record high of $5,500 per ounce last January. In this situation, the big question now arises as to whether investors in gold should be disappointed or should they express relief that the price decline is not more severe. Reuters' Asia Commodities and Energy columnist Clyde Russell wrote on this subject-

Analyzing the price history of the past two decades, it can be seen that after a major jump, the gold market usually comes to a big fall, although the majority of the gains achieved later come to a standstill and stabilize. For example, from September 2022 to January 2026, gold gained a record 245 percent.

The same picture is found if we look at previous trends. From a low of $697.45 per ounce in October 2008, gold reached a record $1,884.40 in September 2011, which was a 170 percent increase. Then, there was a 37 percent decline from there to $1,191.35 in August 2018. From that level, gold jumped 74 percent to reach a peak of $20,72.49 per ounce (August 2020), after which the price fell by 22 percent to $1,620.20 by September 2022.

It is worth noting that the bigger the price increase, the bigger the subsequent decline. Another thing is that price increases occur in a relatively shorter period of time than these price declines or corrections.

From the low of September 2022, the price of gold started to run at rocket speed and reached an all-time record high of $5,594.82 per ounce for the first time in history on January 29 of this year. However, since setting that record, the price has softened or decreased by 20 percent and reached $4,473.89 per ounce last Thursday.

Given this familiar pattern of ups and downs in the past, it is likely that gold will see a further decline in prices in the coming months—and even years—before its long-term upward trend resumes.

However, this calculation only makes sense if we assume that the same factors that have driven the gold market in the past are still present today. Of course, there is always a risk in saying that “this time is different” in financial markets, and there are plenty of examples of such assumptions being proven wrong.

Nevertheless, according to Clyde Russell’s analysis, gold’s historic record this time was largely achieved by the combined effect of several bullish factors, and it was quite unusual because all of them were working in the same direction at the same time.

There were essentially three main reasons for this—first, record increases in gold purchases by central banks; second, strong demand in the retail markets of the two top buyers, China and India; and third, a kind of global panic about geopolitical and economic instability. These fears include high inflation and adverse geopolitical conditions. Especially since Donald Trump returned as US president, investors are worried that his policies could weaken the US dollar's position as the global reserve currency and thereby lead to the decline of US economic dominance.

However, as central banks' gold buying has waned in recent months, so has demand from ordinary buyers in China and India.

According to the latest quarterly report from the World Gold Council, in the first quarter of this year (January-March), central banks around the world bought 243.7 metric tons of gold, which is only 3 percent more than in the same quarter of 2025. However, since the beginning of 2025, bank gold purchases have stagnated at around 200 tons per quarter, which is much lower than in mid-2022 to late 2024. During that time, gold purchases exceeded 300 tons for five consecutive quarters and fell below 200 tons only once.

On the other hand, in the first quarter of this year, the demand for jewelry in China was 85.2 tons, which is 31 percent less than the same period in 2025. In the case of India, this demand decreased by 19 percent to 66.1 tons. According to the council, the overall demand for jewelry worldwide decreased by 25 percent to 260.2 tons in the first quarter.

The high price of gold has mainly put a brake on the demand of ordinary buyers. In addition, the Indian government has increased the tax on gold imports to reduce gold imports and reduce pressure on the balance of payments. At the same time, the investment flow into gold ETFs (exchange-traded funds) has also decreased; 62 tons of gold came into ETFs in the first quarter of the year, which is 73 percent less than the first quarter of 2025.

Overall, while the total demand for gold was 1,315.6 tons in the first quarter of 2025, it decreased by 9 percent to 1,195.9 tons in the same period of 2026. In the context of this massive demand decline, the current decline in gold prices since their record highs in January is considered relatively ‘soft’ and a good performance.

However, the real problem for gold investors is that the market is no longer moving based on its familiar and traditional factors, but is now moving mainly on the basis of US monetary policy forecasts. The inverse relationship between gold and crude oil in recent weeks is a prime example of this.

Whenever crude oil prices rise due to the ongoing conflict between the US and Iran, gold prices fall. Conversely, when oil prices fall on hopes of a peace deal, gold prices