FACTBOX-How investors buy gold and what fuels the market

Jan 12 (Reuters) - Gold vaulted above the historic $4,600 an ounce mark on Monday as a flare-up in geopolitical tensions and expectations of looser U.S. monetary policy led bullion to hit its first record peak of 2026 after a string of all-time highs last year.

Here are some ways to invest in gold:

SPOT MARKET

Large buyers and institutional investors usually buy gold from big banks. Prices in the spot market are determined by real-time supply and demand dynamics.

London is the most influential hub for the spot gold market, with the London Bullion Market Association setting standards for gold trading and providing a framework for the over-the-counter market to facilitate trades among banks, dealers, and institutions.

China, India, the Middle East and the U.S. are other major gold-trading centres.

FUTURES MARKET

Investors can also get exposure to gold via futures exchanges, where people buy or sell a particular commodity at a fixed price on a particular date in the future.

COMEX, part of the New York Mercantile Exchange, is the largest gold futures market in terms of trading volumes.

The Shanghai Futures Exchange, China's leading commodities exchange, also offers gold futures contracts. The Tokyo Commodity Exchange, popularly known as TOCOM, is another big player in the Asian gold market.

EXCHANGE-TRADED PRODUCTS

Exchange-traded products or exchange-traded funds issue securities backed by physical metal, allowing people to gain exposure to gold prices without taking delivery of the metal itself. GOL/ETF

Global gold ETFs witnessed the strongest year of inflows on record in 2025, led by North American funds, according to World Gold Council data. Annual inflows surged to $89 billion.

BARS AND COINS

Retail consumers can buy gold from metals traders selling bars and coins in shops or online. Gold bars and coins are both effective means of investing in physical gold.

WHAT DRIVES THE MARKET?

INVESTOR INTEREST AND MARKET SENTIMENT

Rising interest from investment funds in recent years has been a major factor behind bullion's price moves, with sentiment driven by market trends, news and global events fuelling speculative buying or selling of gold.

FOREIGN EXCHANGE RATES

Gold is a popular hedge against currency market volatility. It has traditionally moved in the opposite direction to the U.S. dollar, since weakness in the U.S. currency makes dollar-priced gold cheaper for holders of other currencies and vice versa.

MONETARY POLICY AND POLITICAL TENSIONS

The precious metal is widely considered a safe haven during times of uncertainty.

U.S. President Donald Trump's trade tariffs have over the last year sparked a global trade war, rattling currency markets. Trump's capture of Venezuelan leader Nicolas Maduro and aggressive statements on acquiring Greenland are adding to market volatility.

Global central banks' policy decisions also influence gold's trajectory. Lower interest rates reduce the opportunity cost of holding gold, since it pays no interest.

CENTRAL BANK GOLD RESERVES

Central banks hold gold in their reserves, and demand from this sector has been robust in recent years because of macroeconomic and political uncertainty.

The World Gold Council said in its annual survey in June that more central banks plan to add to their gold reserves within a year despite high prices.

Net central bank purchases in November totalled 45 metric tons, World Gold Council data showed, pushing the figure for the first 11 months of 2025 to 297 tons as emerging market central banks continued their significant gold buying.

China kept adding gold to its reserves, with its holdings totalling 74.15 million troy ounces at the end of December from 74.12 million in the previous month as it extended its buying spree for the 14th month in a row.