Gold prices achieved multiple record highs in 2025, reaching a new record in January. Throughout the remainder of 2025, prices fluctuated between $4,300 and $5,500 per ounce.
Inflation reached its highest point in more than three years, according to data released on a Wednesday. Interest rates remain at elevated levels, and gold prices increased in recent years during periods of interest rate hikes. Higher interest rates direct investor capital toward assets that yield better returns.
Hiren Chandaria, managing director at Monetary Metals, said, "Gold has preserved purchasing power over very long periods of time. It has long been viewed as a hedge against inflation." Chandaria said, "In an inflationary environment, investors often look for assets that can preserve value outside the banking system and outside fiat currencies. That tends to increase demand for gold, especially from long-term savers and investors looking to diversify away from financial assets that may be vulnerable to higher rates, weaker currencies, or declining real returns."
Chandaria said, "I don't think easing inflation would automatically end the positive case for gold. The reason is that gold is being supported by more than just inflation. Central bank demand, geopolitical risk, high government debt, currency concerns, de-dollarization, and the desire for portfolio diversification all remain important factors." Chandaria said, "Lower inflation may reduce some of the urgency around inflation hedging. If markets believe the Federal Reserve has successfully brought inflation under control, some investors may rotate back into risk assets."
Thomas Winmill, portfolio manager at Midas Funds, said, "We expect gold to finish the 2026 year up about 10% from here, so in the $5,000 per ounce range." Winmill said, "It depends on the response to inflation by central banks around the world, but primarily the U.S. Federal Reserve. If the response is to raise interest rates to fight inflation, as Paul Volker did, then the gold prices will drop." Paul Volcker served as Federal Reserve chair during the 1970s and 1980s.
Steven Conners, founder of Conners Wealth Management, said, "If inflation eases and you are overweight in gold, I suggest selling some to have the position be no more than 5% of your portfolio." Chandaria said, "For long-term investors, I would not try to time the exact bottom. A more sensible approach is to buy on dips and accumulate over time, while recognizing that gold can be volatile in the short run."