Numerous geopolitical flashpoints, a far more strained US-European relationship than in previous decades, and the very real global threat of rising inflation rates – these are, in fact, excellent conditions for a gold rally. Nevertheless, following various price corrections in recent weeks, the gold price has been moving largely sideways. Will gold continue to fulfil its role as a hedge against inflation in 2026? And has it consistently done so in the past? A look at the empirical correlations between gold price movements and inflation provides some insight.
Over the past 35 years, gold has outperformed inflation
According to financial data provider Trading Economics, the current Eurozone has seen average annual inflation of 2.25 percent since 1991, while the gold price has risen by an average of 8,4 percent p.a. over the same period. Since the turn of the millennium, gold has gained an average of 10.5 percent in value, significantly outperforming inflation rates in the monetary union. However, this development has not been entirely consistent every year. In 2014, for example, the gold price dropped -7.31 percent, while inflation stood at 0.91 percent. The same was true in 2021, when, with an inflation rate of 3.01 percent, gold depreciated by -1.84 percent. In these cases, other factors influenced the gold price more strongly than inflation.
Gold fulfils its role as store of value primarily in the long term
Due to the blockade of the Strait of Hormuz, we are already seeing rising inflation rates across many countries, whilst the price of gold in the Eurozone has dropped from a record high of 146.39 € per gram in early March to its current level of around 125 €. Nevertheless, the precious metal is continuing to prove its worth as a hedge against inflation, even in the short term. An inflation rate of around 3 percent in May 2026 is offset by a 4.1 percent rise in the gold price. However, the observation of developments in inflation and the gold price over an extended period confirms the long-term merit of gold investments. One example: since the introduction of Xetra-Gold at the end of 2007, the ETC has gained over 574 percent.