Gold prices have experienced unprecedented surges in recent months, once again bringing into focus the question of why this precious metal, despite periodic fluctuations and price corrections, remains one of the world's most important investment destinations, including in Iran's market. The answer lies in a combination of global and domestic factors, whose impact on Iran's market may be amplified by the dependence of gold prices on exchange rates.
Global Factors: From Central Bank Purchases to Shifting Interest Rate Expectations
In the global market, increased investment demand and gold purchases by central banks have been among the most significant drivers of price growth. According to the latest report by the World Gold Council, central banks added approximately 321 metric tons of gold to their reserves in the third quarter of 2026, representing a 42 percent increase compared with the same period last year. Their purchases during the first nine months of the year also reached 675 metric tons. Meanwhile, gold-backed exchange-traded funds (ETFs) recorded inflows of 211 metric tons during the same quarter. These figures indicate that institutional demand and concerns over economic risks continue to underpin the gold market.
However, the price trajectory has not been one-directional. Gold even surpassed $5,500 per ounce in January 2026, but subsequently underwent a significant correction. In trading on November 11, gold was trading at around $4,043 per ounce, following a decline of approximately 3 percent the previous day. Rising expectations of higher U.S. interest rates following the release of stronger-than-expected inflation data were among the factors weighing on prices. This is because higher bond yields and interest rates make holding a non-yielding asset such as gold less attractive compared with bank deposits and bonds.
Domestic Market: Dual Impact of Exchange Rates and Inflation Expectations
In Iran, fluctuations in global gold prices account for only part of the equation. The price of gold in Iranian rials is influenced not only by its international price but also by the exchange rate. Consequently, even on days when global gold prices remain stable, an increase in the U.S. dollar exchange rate can drive domestic gold prices higher. Meanwhile, persistent inflation and declining confidence in the ability to preserve the value of money have turned gold into a hedging instrument for some households, although rising prices constrain consumers' purchasing power and demand for jewelry.
Political developments also affect the market through their impact on exchange rate expectations. Positive news can ease expectations of further dollar appreciation, leading to temporary declines in gold and coin prices. Conversely, heightened uncertainty may increase precautionary demand. Therefore, the rise in gold prices cannot be attributed solely to increases in international gold prices. The simultaneous impact of global pressures, exchange rate fluctuations, and the behavior of domestic investors provides a more comprehensive picture of this trend.
Key Factors Determining Gold Prices: From Global Gold Prices to Political Developments
Mahmoud Sharbiyani, First Vice Chairman of the Union of Gold and Jewelry Sellers and Manufacturers, told Noor News' economic correspondent: "Gold prices in Iran's domestic market are influenced by two main factors: the international price of gold per ounce and the U.S. dollar exchange rate in the country. Gold prices in Iran are calculated based on the product of these two components, and any change in either directly affects domestic gold prices."
Referring to the significant increase in the international price of gold in recent months, he noted: "The price of gold per ounce rose to approximately $5,500, but it is currently hovering around $4,100. Forecasts had also been made that the international price of gold would reach $6,000 per ounce by the end of 2026."
The First Vice Chairman of the Union of Gold and Jewelry Sellers and Manufacturers emphasized the impact of domestic economic conditions on gold prices, stating: "Inflationary conditions prevailing in the country and the increase in the U.S. dollar exchange rate have also been among the factors contributing to the rise in domestic gold prices. Naturally, when the exchange rate increases, gold prices also rise."
Sharbiyāni, referring to increased demand for gold amid economic and political uncertainty, said: "When people are concerned about the economic situation and political developments, some of them convert part of their liquid assets into gold in order to preserve their wealth. This can also contribute to increased demand and higher gold prices."
Addressing the role of interest rates and inflation in the global gold market, he explained: "Rising inflation in various countries prompts central banks to increase interest rates in order to control inflation. Under such circumstances, some investors prefer to keep their capital in banks rather than purchase gold and other commodities. For this reason, higher interest rates can exert downward pressure on the international price of gold, while, conversely, lower interest rates can help drive gold prices higher."
The First Vice Chairman of the Union of Gold and Jewelry Sellers and Manufacturers emphasized the impact of political news and developments on the gold market, saying: "Positive and negative political developments can directly affect exchange rates and, consequently, gold prices. For example, the release of positive political news in recent days has led to a relative decline in gold and coin prices, as this news has affected the U.S. dollar exchange rate, and the resulting decline in the exchange rate has led to lower gold prices. Conversely, negative political news can cause the U.S. dollar exchange rate to rise and, in turn, push gold prices higher.
