Gold is a precious metal that is loved and hunted by humans, so the price always increases. Besides, gold is one form of investment that is preferred by many people rather than investing in dollars. There are several reasons that support why you should choose gold over dollars as the price is always rising. In the days of our parents, when gold prices were down, they would flock to the gold shop to buy various types of jewelry such as bracelets, necklaces, earrings, and rings. Then, when the price of gold surges, they will resell it. It turns out that our parents used to understand about profitable gold investment.
The price of gold will indeed tend to go up, but it will also go down. What factors influence gold prices to rise and fall?
Check out the several factors that influence the gold prices:
Exchange Rate
It can be said that the most important factor that has a big role in rising or falling gold prices is the exchange rate.
The higher the exchange rate, the price of gold will strengthen or higher and vice versa.
Interest rate
The price of gold will surge when exchange rate is higher, then the price of gold will plummet when interest rates rise.
This is because when interest rates rise, many people withdraw their money and save their money in the form of deposits that have higher interest rates than storing gold. The interest rates themselves can go up and down due to certain factors too.
Amount of Supply and Demand
Supply and demand factors for gold can also affect whether the price of gold up or down.
Just like the prices of other goods where when the number of interesting ones is higher then the price will be higher too. Conversely, if the number of interested people goes down, the price will also go down.
This applies also to the price of gold. When gold enthusiasts go up, prices go up and vice versa when the number of gold enthusiasts goes down, the price of gold will drop too.
Uncontrolled Inflation Rate
The rate of inflation which then makes the prices of goods go up, the uncontrolled inflation will make the price of gold more expensive.
This is because when inflation is high, people do not want to save their money in the form of money. They will buy gold whose prices tend to be stable and safer when inflation.
Because gold is increasingly being hunted, then returning to the previous point where demand increased, the price of gold will increase as well.
Another factor
In addition to the factors mentioned above, several other factors influence the rise and fall of gold prices such as political conditions, world economic conditions, and world crude oil prices. These three things can make gold prices go up or down significantly.
Conclusion
In conclusion, the gold can go up or down. Generally, gold price will certainly increase even though little by a little while the decline in the price of gold is also not much. According to Investopedia, gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline
Therefore, the price of gold will always be stable. Thus, gold for this investment is better gold bars instead of jewelry that have a more stable value. The rate of inflation will make the price of goods more expensive including gold.
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