Gold isn’t just renowned for its physical attributes. As an investment asset, it’s considered a hedge against inflation with its price typically rising during turbulent economic conditions. A relatively volatile asset, it can also experience rapid price drops when the dollar is on the rise. However, the one guarantee is that gold will maintain its status as a store of value, making it an attractive commodity at precious metal firms like Preserve Gold. 

The contentious and unpredictable geopolitical climate has facilitated dramatic swings in the price of gold over the past few months alone. On January 26, the price of gold exceeded $5,100 after President Donald Trump’s threats of 100 percent tariffs on Canada, which coincided with central banks accelerating purchases of the asset. However, a few days later the price of gold dropped 12 percent, marking the largest single-day decline in more than 40 years.  

To highlight the volatility of gold and reaffirm its longstanding status as a store of value, Preserve Gold is looking back on some of the other significant swings throughout modern history. 

Rapid Rise during the Pandemic 

The price of gold almost always rises during periods of economic uncertainty, so it’s no surprise that it experienced a significant jump during the COVID-19 pandemic. The spread of the disease and initiation of government-mandated lockdowns considerably weakened economies and national currencies, specifically the dollar. Thus, as is often the case, investors turned to gold as a proven store of value. 

Gold rose during the first few months of the pandemic, outperforming stocks and bonds. By August 2020, it reached a then-record $2,030 per ounce, up around 24 percent from the start of the year. Even in March, when the price of gold dipped during the start of the outbreak in the US, its decline was modest compared to the collapse in oil prices or stock market crash. 

The price of gold declined after Pfizer announced its COVID-19 vaccine, claiming it would be 90 percent effective at preventing the disease.  

Federal Reserve Tapers Quantitative Easing  

Prior to the pandemic recovery, gold’s most recent significant decline in price was during the aftermath of the Federal Reserve’s tapering of quantitative easing (QE), which helped to strengthen the dollar and promote a market recovery. 

QE is used by central banks like the Federal Reserve to stimulate economic growth by buying securities and expanding the money supply. 

When standard monetary policies are ineffective, central banks sometimes turn to QE to stimulate economic growth, usually when interest rates are near zero. This policy involves a strategic increase in money supply through the purchase of government bonds and other securities, which some critics argue is similar to printing more money. Historically, this has coincided with major increases in the price of gold. 

However, when the US began tapering QE, the price of gold was negatively affected. Gold dropped 29 percent in value from $1,695 in January 2013 to $1,200 in December 2014. 

This highlights an important dynamic: gold often performs differently depending on the direction of interest rates and monetary policy. 

A Record Price during the European Sovereign Debt Crisis 

From 2008 to 2012, many European countries, particularly Greece, Portugal, and Spain, saw the collapse of their financial institutions due to high levels of government debt from widespread deficit spending and poor lending practices, among other factors. Known as the Eurozone debt crisis, this period began with Iceland’s banking collapse and required bailout funds for multiple European countries. At one point, Greece’s debt was moved to junk status.  

Due to the tough economic conditions in the affected countries, other European nations were faced with higher interest rates from lenders, making it more difficult to finance their budget deficits. The European Central Bank, International Monetary Fund, and European Financial Stability Facility eventually intervened in the crisis. 

In line with historical trends, gold became a more attractive commodity not only in Europe, but worldwide during the European sovereign debt crisis. It reached a then-record price of about $1,825 in August 2011. 

This moment reinforced gold’s role as a potential hedge during systemic financial stress. 

Turn-of-the-Century Dip and Recovery 

By the turn of the 21st century, a strong US economy—and well-performing dollar—expanded the range of attractive investments beyond gold. Central banks were also selling gold, increasing expected market supply, and pushing prices down.  

In August 1999, the price of gold dropped to about $254 per ounce, down from a low of $277 the year prior. In fact, the 1990s were a relatively quiet period for gold as an investment, but it consistently rose in price during the first decade of the 21st century. It was priced at $280 in January 2000 and reached $1,097 by January 2010, demonstrating how quickly sentiment around gold can shift. 

Surge After the End of the Bretton Woods System 

One of the most significant structural shifts for gold came in 1971, when President Richord Nixon ended the Bretton Woods agreement.  

Prior to this, the US dollar was tied to the price of gold, while all other currencies were pegged to the value of the dollar. Created by the IMF and World Bank in 1944, it helped to drive global trade and influenced currency policy. 

However, when President Richard Nixon announced in 1971 that the US would no longer exchange gold for the dollar, the price of the commodity began a rapid rise. Gold was about $35 an ounce in January 1970, but reached a then-record of approximately $665 by January 1980 due in part to low economic growth, high unemployment, and inflation. 

This period established gold’s modern role as a market-driven asset, rather than a fixed monetary anchor. 

What These Moves Have in Common 

While each of these events is different, they share a common thread: 

Gold tends to respond to: 

  • Economic uncertainty  
  • Inflation and currency concerns  
  • Changes in monetary policy  
  • Global instability  

At the same time, these examples also show that gold is not a straight-line investment—it can experience periods of both strong gains and notable declines. 

Is Gold Right for Your Strategy? 

Gold has historically played a role during periods of uncertainty, but its performance can vary depending on broader market conditions. Understanding when and why it moves can help you decide whether it fits into your long-term plan. 

If you’re considering gold as part of your strategy, Preserve Gold can help you explore your options and walk through what an allocation could look like based on your goals.