Gold’s rollercoaster ride shows the messy state of the global economy

September 29, 2026 — 12:08pm

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If you were looking for an illustrated view of what’s been happening in the global economy and markets over the course of this year, you’d have to look no further than a chart of the gold price.

The precious metal has had a volatile 2026 so far, hitting a record high of $US5595 ($7970) an ounce in late January, falling to a year low below $US4000 an ounce in July, recovering to just under $US4700 an ounce in late August before tumbling back to about $US4160 this week.

The price has been buffeted by the cross-currents being generated by the war in the Middle East, the fiscal stress in developed economies, particularly in the US, stubborn inflation rates, the turmoil in bond markets, and turbulent currency markets.

Many of those influences are centred in the US and flow from the impact of the war with Iran on the markets for oil and its derivative products, although the boom in artificial intelligence-related investment is also playing a role. There are also some longer-term elements to the shifting tides in the price.

The gold rush that pushed the metal to record highs in January was sparked by the three rate cuts the US Federal Reserve made last year as it shifted its focus from inflation to growth.

Gold has historically been regarded as a hedge against inflation but it also has an inverse correlation with interest rates. Gold generates no income from interest but has holding and opportunity costs, so a lower rate environment makes it more attractive.

As an indicator of how troubled, messy and confusing the emerging new world order and the debt-laden global economy are, the gold price is providing some appropriately volatile signals.

With the US flirting with stagflation last year – low growth but relatively high levels of inflation........

© The Sydney Morning Herald