Here’s why the price of gold could fall soon

The price of gold may soon decline if certain conditions are met.

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Investors looking to add an alternative asset like gold to their portfolios haven’t had many chances to do so in an affordable way over the past year or so. Gold prices have surged past so many record highs, just from the start of 2024, that it’s been difficult to keep track. Beginning January 2024 at just $2,063.73 per ounce, the price of gold for the same amount as of August 8, 2025, is now $3,395.31 – a more than 64% jump in just 20 months. 

But while the price of gold tends to only rise over time, there are momentary declines in which investors can take advantage by buying in below cost. Knowing when these moments will present themselves, however, can be difficult to time with precision. Still, if investors know the factors that drive the price of gold, they may be able to find an opportunity. 

This August, some indicators support a small but meaningful drop in price that, if used strategically, can help investors get started at a more affordable entry price point. But why, exactly, could the price of gold potentially fall soon? Below, we’ll examine three factors worth monitoring.

Get invested in gold before the price rises again here today.

Here’s why the price of gold could fall soon

While no one knows for sure what could happen to the price of gold in the weeks ahead, the following factors (either individually or collectively) could help lower the price, even temporarily:

Cooling inflation

It may seem unusual to think of a cooling inflation rate after it rose in May and June, but it’s important to remember that inflation is still multiple times lower than it was three years ago, when it rose to its highest level in decades. Now at just 2.7%, the rate is close to the Federal Reserve’s target 2% goal, which is where they’d like it to be to encourage additional interest rate cuts. 

Should inflation reverse course again and decline as it had been, gold prices could adjust downward, even if that inflation reduction is minimal. That’s because gold prices tend to rise when inflation does and decline when it falls. Still, this relationship is dynamic and not always predictable. Pay attention, then, to August 12, when the Bureau of Labor Statistics releases its next inflation reading for an opportunity to invest below cost.

Learn more about how gold can protect against inflation here.

Cooler geopolitical tensions

Geopolitical tensions have been a historic driver behind gold prices and one of the major reasons why it’s surged in recent years. Conversely, cooler geopolitical tensions can help reverse that trend. Should overseas conflicts wane in the coming weeks, for example, as current negotiations are intended to accomplish, the price of gold could retreat, perhaps by a significant amount. Still, these events are volatile and incredibly difficult to time with any real certainty. But there could be a small, affordable window of opportunity to act if investors monitor daily developments closely.

Lower investor demand

If inflation declines again and if geopolitical tensions ease – two major caveats but still within the realm of possibility – investor demand for safe-haven assets like gold could retreat, causing the price to fall alongside that lower interest. Prices have been so high in recent years, after all, thanks to increased investor demand for a hedge against inflation and portfolio diversification tools. But what if inflation is cooler and the need to buffer stock market uncertainty is less pronounced? Then gold can and likely will decline in price, perhaps more significantly than the minor declines it’s been known to produce historically.

The bottom line

You don’t need to be overly optimistic to see signs that indicate a cooling in the gold price climate this month. That said, it’s especially difficult to time the future price movements for an asset like gold. Prospective investors should then take an all-encompassing approach and monitor the above influencing factors while being ready to buy in should market conditions or unforeseen items impact the price in a downward direction. The best approach to gold investing remains an informed and proactive one, even with prices high right now.

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