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5 Factors Which Affect the Price of Gold

Last updated 5 years ago

Are you looking for a solid investment? If so, consider adding gold to your portfolio. The team at Capital Gold Group can help you diversify your portfolio by investing in gold and precious metals. Before you give us a call, look over these five factors which affect the price of gold:

1. Value of the U.S. dollar: The US Dollar and gold prices have an inverse relationship in most cases; that is, when the former declines, the latter appreciates, and vice versa. For example, when there was a threat of a double-dip recession in the United States economy in 2010, the value of the US Dollar plummeted against most other major currencies while gold prices soared.

2. Geopolitical conflicts: During times of war, many countries experience a decrease in the value of their currency. As a result, individuals often purchase more gold because this precious metal provides a more secure type of wealth. This reaction causes the price of gold to increase.

3. Supply and demand: The simple system of supply and demand plays an important role in determining the price of gold. The supply of gold is limited, so when demand for the yellow metal increases, such as during geopolitical conflicts or economic crisis, prices rise as consumers flock to the safe-haven.

4. Global economic instability: Gold has often been called a "crisis commodity" because it tends to outperform other investments during periods of global economic unrest. The very same factors that cause other investments to suffer cause the price of gold to rise.  As banking crises continue to occur worldwide, the value of paper currencies is rapidly decreasing while the value of gold continues to increase.

5. Production of gold: Gold production is declining. It is very difficult to open new precious metals mines when the whole process takes an average of seven years to complete. Due to this factor, it is hard to keep up with the increased demand for gold worldwide from countries like China and India.

You can learn more about factors that affect the price of gold from Capital Gold Group. We can help you determine the best options for you to buy gold and silver. Give us a call today at (800) 510-9594 to get started!

The representatives at Capital Gold Group are not financial advisors and the information provided in this blog should not be considered financial advice. The past performance of gold investments is not indicative of potential future gains.


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