What Influences Gold Price? Here are The 5 Factors
What Influences Gold Price? Here are The 5 Factors
What Influences Gold Price? Here are The 5 Factors, What influences gold price? Gold is the most preferred safe haven asset by gold buyers and sellers across the world. As such, the evolution of its price is an indication of investors’ perception of the global situation or the situation in an economy. Gold also has a significant correlation with some currencies like the Yen, Euro, the US Dollar, and many others. In this case, monitoring the evolution of the price of the precious metal allows one to obtain precise information from different markets. As a matter of fact, the price of gold is usually quoted basing on the US Dollars. The unit of measurement is the troy ounce of gold, which is equivalent to 28.35 grams. The price of gold is sometimes subjected to fluctuations as a result of some factors; albeit moderately. Today, we will talk about the most relevant factors. What Influences Gold Price? Here are The 5 Factors.
The first one is the forces of supply and demand
Like other commodities, gold is also subject to the law of supply and demand. There are two elements that influence this aspect: the volume of production at the time and the interest of investors or buyers in the metal. What influences gold price, in this case? If there is limited supply and increased investor interest, the price will go up. On the other hand, if the gold suppliers tender more gold for sale and there is less investor interest, then the price will go down.
What influences gold price? The strength of the dollar does
Every single ounce of gold is quoted against the US dollar. As such, the relationship between the dollar and gold remains decisive and inversely proportional. In other words, the stronger the US dollar, the lower the price of gold. On the other hand, if the currency depreciates, the price of gold can rise. In this case, the strength or weakness of the US dollar is what influences gold price.
Another factor is the industrial application of gold
One of the characteristics that sets gold apart is its different industrial applications. The best example is its use in electronic and technological devices. The higher the manufacture of these gadgets, the higher the demand for gold. In the end, this is what influences gold price.
Stock market interest rates
Although there is no direct relationship between the stock markets and gold bullion, a hike in the stock market interest rates is what influences gold price. If the rate proliferates, investors seek liquidity and they sell the gold to look for other investments that provide them with short-term profitability. On the other hand, if the interest rate falls, gold offers less investment costs and the interest on it will rise, causing its price to rise as well.
A booming gold jewellery industry
When there is a boom in the sale of gold jewellery, it translates into a higher demand for the metal. This, directly, causes the price of gold to rise. If you want more information about buying physical gold from the Democratic Republic of Congo, feel free to contact me for help.
