How Gold Has Behaved During Recessions
Gold has not behaved the same way in every U.S. recession. Looking at the downturns dated by the National Bureau of Economic Research since the early 1970s, gold rose substantially in some, fell in others, and did little in a few. The common thread is that inflation, interest rates, and the cause of each recession seem to have mattered more than the recession itself.
Who Decides When a Recession Happens
In the United States, the generally accepted recession dates come from the NBER's Business Cycle Dating Committee, a private group of economists. It defines a recession as a significant decline in economic activity spread across the economy and lasting more than a few months, and it looks at measures such as employment, income, spending, and production. The committee usually announces peaks and troughs well after they happen, sometimes by a year or more, which means people rarely know in real time that a recession has started.
Why Recessions Are a Concern for Savings
Recessions can bring job losses, falling business profits, and declining stock prices, and they sometimes coincide with stress in the banking system. People with savings concentrated in a single type of asset may see significant losses. Some people hold gold as one potential way to diversify against these risks, because its demand comes from sources that differ from corporate earnings. The history below shows how that has played out, and why results varied.
Gold Across Recent U.S. Recessions
The table summarizes the general direction of gold's dollar price from the start to the end of each NBER-dated recession, based on LBMA historical price data. It is a broad description, not a precise performance figure.
| Recession (NBER dates) | Backdrop | Gold's general path |
|---|---|---|
| Nov 1973 – Mar 1975 | Oil shock, high inflation | Rose substantially |
| Jan 1980 – Jul 1980 | Inflation near its peak, rising rates | Peaked at the start, then fell sharply |
| Jul 1981 – Nov 1982 | Very high real interest rates | Fell into mid-1982, then rebounded |
| Jul 1990 – Mar 1991 | Gulf War, savings and loan problems | Brief spike, little net change |
| Mar 2001 – Nov 2001 | Technology stock decline, September 11 | Modestly higher from very low levels |
| Dec 2007 – Jun 2009 | Global financial crisis | Rose overall, with a sharp drop in late 2008 |
| Feb 2020 – Apr 2020 | Pandemic shutdowns | Dipped in March, then rose |
What the Pattern Suggests
Inflationary recessions vs disinflationary ones
The 1973–1975 downturn came with soaring prices, and gold rose. The early 1980s downturns came as the Federal Reserve pushed interest rates to historic highs to break inflation, and gold fell for much of that time. This contrast suggests gold may respond more to the inflation and interest-rate backdrop than to the recession label. Our pages on stagflation and gold and interest rates expand on this.
Liquidity squeezes
In late 2008 and again in March 2020, gold fell during the most intense weeks of market stress before recovering. A common explanation is that some holders sold gold to raise cash or meet margin calls on other positions. Gold's liquidity can make it one of the first things sold in a scramble for cash, even if demand later returns.
Policy responses
In both 2008–2009 and 2020, the Federal Reserve cut rates to near zero and expanded its balance sheet. Gold's later gains in those episodes coincided with these responses, which lowered real yields. See quantitative easing and gold.
Gold Compared With Stocks in Downturns
In several recessions, gold held up better than U.S. stocks, which is why some people consider it a potential diversifier. But it is not a consistent hedge: in the early 1980s both struggled for parts of the period, and gold's own price has fallen by large amounts outside recessions. Our comparisons of gold vs stocks and gold and stock market volatility look at the relationship more broadly.
Limits of This Kind of History
- Seven recessions is a small sample, and each had different causes.
- Recession dates are only known after the fact, so real-time decisions rarely line up with them.
- Start and end points can change the picture a great deal for a volatile asset.
- Past behavior does not indicate how gold might act in any future downturn.
For a longer view of the price itself, see our gold price history. If you are weighing physical metal as part of a broader plan, our Goldco review describes how one precious metals company works with customers, and a licensed financial professional can help you consider your own circumstances.
Frequently Asked Questions
Does gold go up in every recession?
No. Gold rose in some recessions, such as 1973–1975 and 2007–2009, but fell for much of the 1981–1982 recession and changed little in 1990–1991.
Why did gold fall in March 2020?
Many assets were sold at once as markets sought cash. Gold dipped during that period, then rose as the Federal Reserve cut rates and expanded its balance sheet.
Where can I find official recession dates?
The NBER publishes U.S. business cycle peaks and troughs on its business cycle dating page, and FRED offers recession shading on its charts.
Can gold help in a recession with high inflation?
The 1973–1975 example suggests it may, but one period is not enough to draw firm conclusions, and outcomes depend on many factors.