The price of gold is continually fluctuating. So, what affects the price of gold on any given day?
Gold is a standard value for the world’s currency. The world’s gold market price is determined by the current value of the U.S. dollar. A stronger dollar, a higher rate. A weaker dollar, the lower the price. Below are some influences on what makes the gold price go up and down.
When people lack confidence in governments or the economy, gold prices tend to rise. Because the view of gold is that of a source of safety, world events impact the cost of gold.
Another reason cited for holding gold is as a hedge against inflation and currency devaluation. Currency values fluctuate, but gold values might stabilize for the long term. Because gold is valued around the world over—gold is attractive as a low-risk, substantial investment amid fluctuating currencies. People who invest may feel encouraged to invest in gold when they believe the value of paper money will slip.
Value of the U.S. Dollar
The world is lead by the U.S dollar, making it a prime source of currency for other countries to hold for international trade. The dollar and gold having a conflicting relationship; when the dollar is strong, gold is weaker, and vice versa.
Jewelry and Industry
Gold can be more than an investment. Gold is used in jewelry and for industrial purposes. Jewelry accounts for more than half of gold demand. The three countries with the most significant needs for jewelry are India, China, and the United States. In parts of India, gold still has buying power; it is also a display of wealth, a wonderful gift, and security against an economic downturn. This demand drives up the price of gold in India. In China, gold is a symbol of good fortune; when Chinas economy is booming, more people have money to spend on gold.
There is also a demand for gold generated by industry; another twelve percent of gold demand is for industrial purposes. Gold is used by many manufacturers in different electronic devices, from computers to GPS systems, and medical devices.
The Amount of Gold Produced
A limited amount of gold gets produced every year. This limited amount would be about the size of a cube that is about 16 square feet in size.
Even though new production might seem modest compared to the total supply, production costs can influence the value of all gold in the world. When production costs rise, miners sell gold for more money to preserve their profits, and this inflated price comes when its time to sell coins, and it doesn’t matter if the gold was mined yesterday or thousands of years ago.
Supply vs. Demand
Archeologists claim that gold has been mined and sought after for at least 5,000 years. When looking at this and the fact that gold is desirable, it is going to remain precious. If you are thinking about buying gold, remember that the price of gold fluctuates with the economy, interest rates the stability of the dollar and, the demand generated by jewelry and other industries. In other words, gold is not an infinite resource, and when global economic conditions make gold more attractive, gold demand increases, making the price of gold rise. But the actual value of gold remains relatively stable in the long run, and the price could reflect temporary uncertainty or pure currency fluctuations.