As many of us already know, gold is considered the best hedge against inflation. So does this mean gold price is in a constant upward drift? Well, yes and no.

While gold has been seen as a source of wealth and prosperity since ancient times, it is important to note that gold price, just like every other asset out there, can face periods of stagnation or depreciation.

One reason is that gold does nothing on its own. Holding gold does not bring in dividends like in equity, or interest like in bonds. It just sits there looking pretty.

Furthermore, government policies and market forces can also affect gold prices. As discussed previously, gold prices are affected by central bank policies through their control of interest rates.

However if you look at a long enough horizon, gold price generally follows an upward drift. Due to inflation, markets drive up demand for gold, allowing its price to rise. In fact, inflation is not the only reason for gold price to rise. Political and economic uncertainty also cause gold price to rise.

In addition, mankind has found many uses for gold ranging from electronics to dentistry. Looking at previous articles will show you the many uses of gold in various industries.

So while gold price generally tends to drift upwards, we need to know our investment time line in order to not get caught off guard by a sudden volatile movement in the markets.

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