Gold Volatility Is Rising With The Rally

The gold price has more than doubled since clearing $2,000 an ounce in early 2024. And with it, gold volatility has kept rising. According to the monthly Bollinger Bands, volatility hasn’t been this high since 1982.

The gold line in the chart is the Bollinger Band Width indicator. As the name suggests, it measures the width of the Bollinger Bands. The wider the bands get, the more volatile the gold price. Here, the chart shows the monthly Bollinger Bands. That means we’re measuring gold volatility over the long run (rather than week to week or day to day). 

Since the rally got going in early 2024, the gold price has been hugging the top band – and pulling it further from the lower band. In other words, gold’s “higher time frame” volatility has been rising with the rally. This bullion bull run has gotten more and more extreme.

What could this volatility mean for gold investors?

The more extreme (volatile) this rally gets, the bigger the gains for gold investors. But that comes with a greater risk of a major pullback. So long as gold’s volatility keeps rising each month (the monthly bands get wider), momentum still favours the bulls. 

But if (and when) the monthly bands start to narrow, the metal’s melt-up could freeze.

As usual, none of this is investment advice. To learn how to trade or invest using Bollinger Bands, check out our Bollinger Bands Explained guide.