Gold and precious metals: how gold is priced and what drives it

Gold is the oldest store of value still traded every day, and it is an odd asset. It pays no interest or dividends, it has modest industrial uses, and most of the gold ever mined still exists in vaults and jewelry. Its price is set by what people will pay to hold it — central banks, investors, jewelry buyers — rather than by cash flows. That makes gold hard to value and easy to tell stories about.

This guide sets the stories aside and looks at mechanics and data: how gold is quoted and traded, the ways to own it, what the front-month futures price did from 2000 to October 2026, and how gold has behaved against the real interest rate, the yield on inflation-protected Treasuries. That relationship was one of the most reliable in markets for 17 years and then stopped working the way it used to after 2021. Silver, platinum and the other precious metals get a short section at the end.

How gold is priced and traded

Gold trades around the clock in several linked markets: over-the-counter in London, futures on COMEX (part of CME Group) in New York, and exchanges in Asia. The price you see quoted as "gold" on a market screen is usually the front-month COMEX futures price, the GC contract, or a spot price close to it.

One GC contract is 100 troy ounces with a minimum tick of $0.10 an ounce, so each tick is worth $10 and each $1 move is $100. At the October 30, 2026 front-month price of $3,977.70, one contract controlled about $397,770 of gold. Futures contracts are physically delivered and leveraged; see Futures contracts explained: specs, clearing, expiry and settlement and Futures margin and leverage: initial, maintenance and margin calls. Because gold is cheap to store relative to its value, its futures curve usually sits in mild contango, so rolling gold futures costs less than rolling crude (see Contango, backwardation and roll yield: why USO lags oil).

Ways to own gold

SPDR Gold Shares (GLD) is the best-known example of the fund route. According to its sponsor, it holds gold bullion in allocated form with custodian banks and aims to reflect the price of gold, less expenses. Because the fee is deducted from the gold it holds, GLD's share price drifts slightly below the metal's over time.

The long record: 2000–2026

From the snapshot:

• September 2000: $273.60 an ounce.
• August 2011: $1,828.50, a monthly-close high at the time.
• December 2015: $1,060.30, down 42% from August 2011. Gold took more than four years to fall that far, and no later month-end close in the data exceeded August 2011's until 2020 (July 2020 closed at $1,962.80).
• August 2020 to December 2023: roughly flat, from $1,978.60 to $2,071.80.
• January 2026: $4,745.10, the highest monthly close in the data, after a close of $4,341.10 in December 2025.
• October 30, 2026: $3,977.70, about 16% below that January high.

Over the full period that is a gain of about 14.5 times, or 10.7% a year in price. GLD, which started trading in late 2004, rose from $42.22 in January 2005 to $368.57 on October 29, 2026, about 10.4% a year. Those are strong numbers, but they come from a starting point near a multi-decade low and with long dead stretches inside them. Gold has no earnings to anchor its price, so these rates of return are a record, not an expectation.

Gold and real interest rates

The real yield is the interest rate after inflation. The cleanest market measure is the yield on Treasury Inflation-Protected Securities (TIPS): the 10-year TIPS yield is what a 10-year Treasury pays above inflation as measured by the CPI. (See Real interest rates: nominal rates minus inflation, explained and TIPS and breakeven inflation: how inflation-protected bonds work for how it is built.)

The textbook link to gold is an opportunity cost. Gold pays nothing. When safe bonds pay a high real return, holding gold means giving that up; when real yields are low or negative, the sacrifice is small. On that logic, gold should rise when real yields fall, and fall when they rise.

2005–2021: the relationship held

For 17 years the data match the textbook. Measured on month-end levels from January 2005 to December 2021, GLD and the 10-year real yield had a correlation of −0.90 — about as tight an inverse relationship as markets produce. Two episodes in the figure show it:

• 2013. The real yield rose from −0.67% at the end of 2012 to 0.80% at the end of 2013, and GLD fell 28%, from $162.02 to $116.12.
• 2020–2021. The real yield fell to about −1.0% by July 2020 and stayed between about −0.6% and −1.2% through 2021; GLD reached $185.43 in July 2020 and was $170.96 at the end of 2021.

2022–2026: the relationship broke

Then the pattern changed. The real yield jumped from −1.04% at the end of 2021 to 1.58% in October 2022, and GLD fell 11%, as the old relationship would predict. But from October 2022 onward, both rose. By September 2026 the real yield was 2.93%, higher than at any month-end since 2008 in this series, and GLD had climbed to $380.84, up about 151% from October 2022. On month-end levels, the correlation for January 2022 to October 2026 was +0.48, the opposite sign from the previous 17 years.

The break is in the level, not entirely in the month-to-month moves. Comparing each month's percentage change in GLD with the change in the real yield, the correlation was −0.50 for 2005–2021 and still −0.40 for 2022–2026: in individual months, rising real yields still tended to coincide with weaker gold. What changed is that gold kept rising over the period even as real yields climbed. The data show that something other than real yields carried gold's trend from late 2022; they do not show what it was, and this article does not guess.

Gold and inflation

Gold is often called an inflation hedge. Over our sample the description is weak. We compared GLD's 12-month price change with the 12-month change in the CPI for each month from March 2007 to September 2026: the correlation was 0.07, essentially none. The same test gave 0.76 for the broad commodity fund DBC, whose basket includes energy and food, which are part of the CPI itself (see Commodities explained: energy, metals, crops and how to own them). In 2022, the year CPI inflation reached about 9%, GLD's price fell 0.8%. Over very long horizons gold has kept its purchasing power, but year to year it does not track consumer prices.

Silver, platinum and the other precious metals

Silver, platinum and palladium are also called precious metals, but they behave differently from gold because a much larger share of their demand is industrial — electronics and solar panels for silver, vehicle catalytic converters for platinum and palladium. That ties them more closely to manufacturing and makes them more volatile. Silver has its own COMEX futures contract and, like gold, physically backed funds. Their prices tend to move with gold over long periods but with bigger swings both ways.

Pitfalls and limitations

• No cash flow, no anchor. Gold cannot be valued by discounting income, so there is no "fair value" to fall back on in a decline. A 42% drawdown lasting four years is part of its record.
• Relationships change. The real-yield link, once treated as a rule, did not hold on levels after 2021. Any single-factor model of gold deserves suspicion.
• Front-month futures are not a holding. A continuous GC=F chart splices contracts; holding futures means rolling them, and a fund's fee means GLD's return trails the metal slightly.
• Physical metal has frictions. Coins and bars carry dealer premiums and spreads that can amount to several percent round trip, plus storage and insurance.
• Taxes. In the US, gold and physically backed gold funds can be taxed as collectibles, at different rates from stocks. Check current IRS rules or a tax adviser.

Gold compared with other assets

Gold's long-run price gain in this window outran stocks' price gain, but stocks paid dividends on top, and the two had very different paths. For the full cross-asset picture, see Asset classes explained: stocks, bonds, cash, real assets and more.

How Finabase does it

Gold appears in Finabase in three forms. The Futures page lists precious-metal futures — gold, silver and platinum among them — next to energy, grain, index and bond contracts, each with its last price, daily change and returns from one week to two years. GOLD=F and SILVER=F open symbol pages with a quote and a chart of the continuous front-month price. The bullion fund GLD has an ordinary symbol page, like any ETF, and gold-mining companies appear among Materials stocks on the sector pages.

For the real-yield side of this article, the Treasury page shows today's nominal Treasury yields from 1 month to 30 years; the app does not show TIPS real yields. The two figures here are ours, built from Finabase price history and the Federal Reserve's TIPS yield series via FRED.

Frequently asked questions

What drives the price of gold?

No single factor. Over 2005–2021, the 10-year real interest rate explained most of gold's trend, with gold rising as real yields fell. Since 2022, gold has risen alongside higher real yields, so other demand has mattered more.

Is gold a good hedge against inflation?

Not year to year. In our 2007–2026 data, gold's 12-month price change had a correlation of only 0.07 with CPI inflation, and it fell slightly in 2022, when inflation was near 9%.

How much gold is in one gold futures contract?

One COMEX gold futures contract (GC) covers 100 troy ounces. At $3,977.70 an ounce, the front-month price on October 30, 2026, that is about $397,770 of gold.

What is the difference between GLD and gold futures?

GLD is a fund that holds allocated gold bullion and charges a 0.40% annual fee, with no leverage or expiry. Futures are leveraged contracts that expire and must be rolled, and they require margin.

Why do real interest rates matter for gold?

Because gold pays no income. When inflation-protected bonds pay more, holding gold costs more in forgone return, which historically weighed on its price.

Summary

Gold is priced in dollars per troy ounce, traded through futures, bullion funds, coins and mining shares, and earns nothing but its price change. That change has been large — about 14.5 times from September 2000 to October 2026 for front-month futures, or 10.7% a year — but uneven, with a 42% fall from 2011 to 2015 and a 16% slide from the January 2026 high. For 17 years gold moved inversely to the 10-year real yield, with a level correlation of −0.90; from 2022 to 2026 both rose together, even though month-to-month changes still leaned opposite. Its link to CPI inflation in our data was close to zero. Gold behaves as an asset of its own, driven by demand that no single rate or price fully captures.