Is there a correlation between gold and inflation?

But it doesn’t quite work that way. There’s no direct correlation between inflation and the price of gold. In fact, gold can act as a hedge against inflation. That’s one of the best ways to make sense of the relationship between gold and inflation.

Is gold a 'emotional asset'?

When it comes to gold, as an “emotional asset” it has been reflecting investors' mood about inflation quite well. Its price hasn’t moved up largely while investors thought inflation worries were going to fade away, and that the Fed was handling the situation well enough.

How does a recession affect the price of gold?

Notice that inside of each recession (shaded areas), the price of gold tends to drop initially before rebounding. In fact, in the most recent recession the price of gold fell by about 12% in two weeks. Of course, it rebounded quite rapidly and is now progressively climbing higher.

Why is gold a good store of value?

Indeed, because the gold price is measured with currencies, when rising inflation drives up prices and lowers the purchasing power of paper currencies, gold often sees its price rise along with everything else. This is why gold has historically been considered a good store of value to turn to when a currency ends up losing its value.