The global price of gold has risen sharply, with the precious metal reaching a historic high of around $4,000 per ounce.

What is driving the continued rise in gold prices?

According to Akif Nəsirli, head of the Liberal Economists’ Center, the surge is primarily due to global and regional economic factors. He told Bizimyol.info that states, funds, and large investors are purchasing gold as a reserve asset to protect against inflation.

“Gold’s rise to a historic maximum of $3,740 per ounce stems from both global economic processes and regional tensions,” he explained. “Wars and regional conflicts — such as the Russia-Ukraine war and Middle East crises — push investors away from risky assets like stocks and currencies, toward gold as a safe haven. At the same time, the U.S. Federal Reserve has lowered interest rates, which weakens the dollar and makes gold more affordable.”

He also noted that ongoing inflation across many countries keeps demand high, as central banks in China, India, and Russia are increasing their reserves to reduce currency risks. Furthermore, gold’s industrial applications — in electronics and renewable energy technologies — contribute to rising demand.

Impact on Azerbaijan’s gold market

Nəsirli emphasized that the prices of gold jewelry and coins in Azerbaijan are directly linked to global markets. The rise in gold prices will therefore have both positive and negative effects domestically:

Positive: The value of Azerbaijan’s gold reserves — held by the Central Bank and the State Oil Fund — will rise, increasing total foreign currency reserves. Higher global prices will also boost revenues for local gold producers in Dashkasan, Kalbajar, Gadabay, and Zangilan, potentially increasing tax and customs income for the state budget.

Negative: Higher prices will weaken consumers’ purchasing power and reduce demand for gold jewelry and coins. Since part of Azerbaijan’s gold jewelry is imported, global price hikes will further accelerate domestic price growth.

He added that some savers may switch from currency or real estate investments to gold, creating additional movement in the banking sector.

“Overall,” Nəsirli concluded, “rising gold prices will be beneficial for Azerbaijan in terms of higher budget revenues and stronger reserves, but they will negatively affect consumers by reducing purchasing power and raising living costs.”

Günel Həsənova, Bizimyol.info