Gold and inflation: what the data shows, and its limits
What inflation is according to BNM, how to work out a real return, what the World Gold Council says on gold and inflation, and the data's limits for Malaysia.
30-second summary
- Inflation measures how the overall level of prices of goods and services changes. BNM says high inflation erodes the purchasing power of savings.
- A real return is roughly the nominal return minus the inflation rate.
- According to the World Gold Council, since 1971 the gold price in US dollars has outpaced US and world consumer price indices over the long run.
- But that is a very long-run average in US dollars. Over shorter periods gold can fall or lag, so it is not a sure hedge.
What inflation is
According to BNM, inflation measures how much the overall level of prices of goods and services in the economy has changed over a period. Every month, the Department of Statistics Malaysia (DOSM) collects the prices of a basket of over 500 items from around 21,800 retail outlets nationwide to compute the Consumer Price Index (CPI). Inflation is measured by comparing the change in the CPI over time.
BNM states that for savers and retirees, high inflation eats into savings: rapid price increases quickly erode the purchasing power of savings.
Real return: how to work it out
For Malaysia's latest inflation rate, see DOSM's monthly CPI release. We don't show current figures here.
What the World Gold Council says
The World Gold Council (WGC) is a gold industry body. In Gold as a strategic asset: 2026 edition (4 February 2026), the WGC states that:
- since 1971, the gold price has outpaced the US and world consumer price indices;
- in years when US inflation was between 2% and 5%, the gold price in US dollars rose by 10% a year on average;
- the above-ground stock of gold grows slowly, about 1.7% a year over the past 25 years, compared with faster growth in the money supply of major currencies.
All of these figures are in US dollars and based on US data. The WGC itself states that past performance is not necessarily indicative of future results.
The limits for savers in Malaysia
- A very long-run average. "Since 1971" covers more than five decades. Your savings horizon may be much shorter.
- There are bad years. The WGC records a fall of close to 30% in 2013, and gold has lagged over medium-term periods.
- US dollars and ringgit. The ringgit gold price is also affected by the exchange rate. US data does not necessarily match the ringgit experience.
- Buying and selling costs. The spread and Gold Premium reduce your real return, especially over short holding periods.
- No income. Gold pays no interest or dividend.
A balanced way to think about it
Inflation is one reason people diversify long-term savings, and gold is one option. But an emergency fund still needs to be in cash despite inflation, because its job is to be there immediately. For a fuller comparison, read gold or cash savings.
Risks and costs
- Price risk: gold can lose to inflation over certain periods. There is no guaranteed profit.
- Currency risk: movements in the ringgit affect the ringgit price.
- Spread and Gold Premium: see GAP terms clause 2.3 and the spread article.
- Cancellation charges: clauses 1.17, 2.7 and 3.7.
- No PIDM protection for gold-related products or accounts.
Quick FAQ
Is gold a sure protection against inflation?
No. WGC data shows a very long-run tendency in US dollars, but over shorter periods gold can fall or lag inflation.
What is Malaysia's inflation rate now?
See DOSM's monthly Consumer Price Index release. We don't show current figures so nothing goes out of date.
If inflation erodes money, why not keep everything in gold?
Because you need cash for spending and emergencies, the gold price can fall, and there are costs to buy and sell. Diversifying is more balanced than putting everything into one asset.
What is the difference between nominal and real return?
The nominal return is the percentage rise in ringgit. The real return takes inflation into account: roughly the nominal return minus the inflation rate.
Next steps
First understand prices, the spread and costs on the Prices page. When you are ready, read the steps to register an account in your own name on the Register page.
Sources
- Bank Negara Malaysia, Monetary Policy FAQ (PDF). Published/updated: last updated 6 Nov 2024. https://www.bnm.gov.my/documents/20124/16179534/mps_faq_nov2024_en.pdf (checked 19 Oct 2026).
- World Gold Council (gold industry body), Gold as a strategic asset 2026: Key attributes - Return. Published/updated: 4 Feb 2026; data to 31 Dec 2025. https://www.gold.org/goldhub/research/relevance-of-gold-as-a-strategic-asset/key-attributes-return (checked 19 Oct 2026).
- World Gold Council (gold industry body), Gold as a strategic asset 2026: Potential risks and challenges. Published/updated: 4 Feb 2026; data to 31 Dec 2025. https://www.gold.org/goldhub/research/relevance-of-gold-as-a-strategic-asset/risks-challenges (checked 19 Oct 2026).
- Public Gold, Terms and Conditions for the GAP product (official PDF, in Malay). Published/updated: no printed date; file metadata 28 Nov 2017. https://my-cdn.publicgold.com.my/image/catalog/common/liveprice/pdf/tnc_gap.pdf (checked 19 Oct 2026).
- Public Gold, Terms & Conditions, Risk Disclosure section. Published/updated: page © 2026. https://publicgold.com.my/index.php?information_id=5&route=information%2Finformation (checked 19 Oct 2026).
- PIDM (Perbadanan Insurans Deposit Malaysia), FAQ: Deposit Insurance System. Published/updated: page © 2026. https://www.pidm.gov.my/general/faqs/deposit-insurance-system (checked 19 Oct 2026).
All sources checked on 19 Oct 2026. World Gold Council sources are gold-industry sources, not a regulator. General information, not financial or investment advice. No returns are guaranteed.
Terms used in this article
- Inflation
- A rise in the overall level of prices of goods and services over a period.
- CPI
- Consumer Price Index, computed by DOSM.
- Nominal return
- The percentage change in value in ringgit.
- Real return
- The nominal return after subtracting inflation (approximate).