The Price of Gold in Global Currencies: Year-End Review

The Spotlight

4 minutes read

Dec 20, 2022

Fine gold bars with fluctuating graphs of gold prices in US dollars, euros, British pounds, Swiss francs, and Japanese yen

Gold has had an interesting year, moving up and down mostly due to high inflation and rising interest rates. But there is one often-forgotten driver that’s essential to look at to really see how gold has performed.

It has definitely been a bumpy year for global markets.

Global inflation is still at decades-high levels, the global economy is on the verge of a recession, and Europe is facing a potentially severe energy crisis, mostly triggered by Russia's invasion of Ukraine.

To tame soaring inflation, central banks around the world have been raising interest rates, thus affecting the U.S. dollar and stock prices.

Obviously, all of this has impacted the gold price, which has had quite a bumpy year. However, it doesn’t mean that gold has performed poorly in all major currencies.

Let’s take a look.

What happened to the gold price in 2022: a brief overview

a yellow car riding a green fluctuating curve representing fluctuating gold prices

Like any other asset, gold has experienced some ups and downs this year.

Early in March, gold prices soared above $2,000 to their highest level since 2020 as investors sought protection from rising geopolitical risks and inflation.

Gold and the Fed effect

But since then, gold has lost some of its gains due to other factors that came into play. We call them the Fed effect.

As you know, Fed policy moves are one of the major factors influencing the gold price. There’s a general belief that the gold price usually rises when interest rates fall and vice versa.

So the U.S. central bank has started aggressively hiking interest rates to curb stubbornly high inflation, pushing the U.S. dollar to its highest level in two decades.

Gold and the U.S. dollar

In November, the gold market gained more than 7%. This was mostly caused by a drop in the value of the U.S. dollar and anticipation that the Fed would eventually slow the pace of interest rate hikes, making gold more attractive to investors.

Now, we know that there is a strong relationship between the price of gold and the U.S. dollar, in that the dollar rising and falling in value can impact the gold price.

💡The relationship between gold and the U.S. dollar

As a rule, when the value of the dollar rises relative to other currencies worldwide, the price of gold tends to decrease in U.S. dollar terms. This happens because gold becomes more expensive for non-U.S. investors.

In contrast, as the value of the U.S. dollar declines, gold tends to appreciate as it becomes cheaper in other currencies.

Since many non-American investors measure gold in their local currencies, it is time to take a brief look at how gold has performed in other major currencies.

So here’s the deal…

The gold price has (mostly) increased in major currencies over the past 20 years

Let's take a deeper dive into exploring the performance of gold across the world's major currencies.

As the price and value of gold fluctuate, it's essential to keep track of how its performance fares in your local currency, especially if you keep gold as a form of savings.

Take a look at the chart below:

A table showing how gold has performed in the world’s major currencies between 2000 and 2022.
Table showing gold's performance in major currencies from 2000 to 2022, including the U.S. dollar, euro, British pound, and Swiss franc

The table shows gold’s performance in the world’s major currencies over the past 22 years. As you can see, gold can rise or fall in different currencies at the same time.

Now, it may seem obvious, but since gold is usually denominated in dollars, it may be easy to overlook the fact that its price behaves differently in different currencies.

For example, look at gold's price in U.S. dollars in 2022, and you'll see it dropped 3.3%, so it seems like gold did badly this year. But if you look at the 2022 average in all currencies, gold is actually up 5.2% this year. Moreover, the gold price has gone up 5.7% in euros, 8.5% in British pounds, and 16% in Japanese yen.

And if you look at gold’s overall performance over the past 22 years, you’ll see that its price has increased on average by 9.2% in all major currencies. So, to get a better picture of gold's performance, remember to always compare the gold price in U.S. dollars and your own currency.

💡Go to our gold price page to track live gold prices in EUR, CHF, GBP, and USD.

What are the key takeaways?

  • The price of gold varies according to the currency in which it is measured.
  • The gold price reflects both its intrinsic value and the relative strength of the currency in which it is traded.
  • If the gold price went down in the U.S. dollar, it doesn't mean it did the same thing in your local currency.
  • Keeping some gold as part of your savings can provide an important layer of protection and financial security, especially now when inflation remains high, and recession is a possibility.

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