Emmanuel

Gold Price- What influences the rise and fall of this precious metal? Gold is a much-sought-after commodity that is used in a variety of applications. The price of gold is never stagnant, it fluctuates all the time due to a number of reasons. To make decisions about selling or buying gold, you need to know and understand what influences these price fluctuations. The most obvious factor is demand supply and demand. Certain global markets drive the demand and supply line for gold, for instance, India is regarded as the largest international gold jewellery hub. The Indian jewellery market is old driven largely by the culture and the high regard that society has for gold. Gold jewellery is more than just an accessory, it is part of marriage rites and also important in many religious and cultural practices. The demand for gold rises during the Indian wedding season that happens from October to November and again from January to March. It is estimated that over 20,000 Indian Weddings take place during these months, meaning the demand is high. When demand goes up, the price of gold also goes up and the opposite is true for a decline in the demands. Besides cultural factors, the price of gold is affected by major global events and global issues. For instance, in January of 2020, the U.S Geological Survey of Mineral commodities reported that the gold price was 10% higher than it was in 2018 but lower by 16% in 2012 when it was posting record-breaking highs. At the beginning of 2019, the gold price stood at $1,300 a troy ounce and increased to $1,547 an ounce in September of the same year. The factors that contributed to the increase in the gold price include: Rising gold purchases by central banks The reduction of interest rates by the American Federal Reserve Board China and the U.S have had a strained relationship since the institution of trade restrictions by former U.S President Donald Trump. The issue with supply and demand is that gold mining hasn’t gone through major changes in the last four years which means the supply is limited. Gold mine production has not increased; instead, the 200 tonnes that were mined domestically in the U.S for instance is less than what that same country produced in 2018. Investors also look at interest rates when they have to consider whether to buy or sell gold. High-interest rates make holding gold expensive. Reduced interest rates can push the price of gold higher – making it less ideal to hold on to gold. Gold investors look at these factors when deciding whether to sell or buy gold. When you are dealing with gold, the common term you are most likely to come across is the spot price. This is what gold buyers base the prices they quote for their gold on. The strength of the U.S Dollar The U.S dollar is the global reserve currency, gold is also expressed in terms of US dollars. When the US dollar is strong, the price of gold is also high, and conversely, it declines when the dollar weakens. This is not just about gold in the United States of America but holds true for other foreign currencies that are pitted against the dollar. It should be mentioned that inflation affects the U.S dollar and the price of gold. If inflation goes up, so does the price of gold. Wealth Protection Gold has prevailed through the worst economic slumps. Investors finding themselves in economic hardships found that their wealth is better protected in turbulent times and during a recession. The yellow metal retains its value when bonds, real estate, equities, and other assets are all on a downward spiral. For a long time, gold has been regarded as a hedge during unstable economic and political times. Gold has been doing pretty well for the past three years. If you need the cash, or you need to diversify your investment portfolio, now might be the right time to sell. Before you do, know what your gold is worth. Many gold buyers will give you a proper professional appraisal. The most important thing you should keep in mind is: Know your gold; know what it’s worth by having it appraised and although some gold buyers might offer free appraisals, do not sell gold if you don’t know all there is to know about what you are selling.