Domestic price of gold

IBISWorld expects the domestic price of gold to increase by 30.9% in 2025-26, to $5718.1 per ounce. This increase is driven partially by market speculation over a possible decrease in the Federal Funds rate, which was subsequently confirmed when the Federal Reserve implemented a 25-basis-point cut in September 2025. This monetary easing cycle reduces the opportunity cost of holding non-yielding assets, boosting gold's global appeal, with further rate cuts expected through late 2025 and 2026. Additionally, central banks have been purchasing over 1,000 tonnes annually since 2022, marking a historic diversification away from dollar reserves and creating structural demand that accounts for 25% of the market. Heightened geopolitical tensions, including renewed US-China trade conflicts and ongoing instability in the Middle East, have driven demand for safe havens to unprecedented levels.

Gold is valued both for its use as a commodity and as an investment vehicle. Gold is particularly valuable when economic uncertainty rises, as it tends to maintain or increase in value during economic downturns. Over the long term, gold can also serve as a hedge against inflation, as its value tends to increase when the value of fiat currency declines. In Australia, the domestic price of gold is closely tied to the global price and is therefore also influenced by fluctuations in the value of the Australian dollar in US currency terms.

Over the past decade, the domestic price of gold has fluctuated moderately. Since the global financial crisis in 2008-09, the domestic price of gold has remained significantly high. Many investors turned to gold as a safe haven for their monetary assets during the crisis. This strong boost in demand contributed to a surge in the domestic price of gold up to 2011-12. Gold prices dropped slightly in 2012-13 and 2013-14 as the global economy stabilised and financial markets recovered. However, since 2014-15, the domestic price of gold has risen consistently as investors have sought to reduce risk amid rising uncertainty in global equity markets. Unexpected market shocks, like the 2016 Brexit vote, the Black Monday sell-off of Chinese equities in 2017 and the COVID-19 pandemic, have led to a higher domestic price of gold.

Over the past five years, multiple factors have driven investors toward gold, pushing prices higher. These include geopolitical tensions, US presidential elections, inflation concerns, the COVID-19 pandemic, recession fears, and a string of international bank collapses since March 2023. Moreover, several global central banks and Chinese private investors are buying gold instead of owning currency. The depreciating Australian dollar against the US dollar has also boosted domestic gold prices. The rising price of gold over the past five years has been particularly remarkable, given the strong growth of the All Ordinaries index, an unusual pattern, as gold typically moves in the opposite direction to equities. This suggests that economic uncertainty is high, despite strong growth in equity markets. Overall, IBISWorld forecasts the domestic price of gold to increase at a compound annual rate of 18.2% over the five years through 2025-26.