What is Influencing the Price of Gold ?
April 21, 2010 · Posted in General
Why is Gold continuing this decline? A month ago, it was said that there was such a demand for Gold that the US Mint was temporarily discontinuing the Golden Eagle coin due to demand, and even Kitco had a 6 or 7 week waiting period on all shipments due to the high demand. But even with Oil prices plunging and the stock market plunging, gold continues to drop in price. I guess that I figured that gold was a safe "hedge" and that the prices would still be climbing. So why is it steadily dropping? The same with Platinum. I've not seen precious metals this low in quite some time. Thanks for any input you might be able to contribute.
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6 Responses to “What is Influencing the Price of Gold ?”
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increase in fuel is the main reason to increase in gold
Hughe numbers of panicky investors are pulling out their money to invest in ultra conservative investments. This is causing an abnormal drop in normally safe investments. It won’t last too long.
Gold is priced in US dollars. And most buyers of gold are foreigners who have foreign currencies. When the US dollar goes up relative to other currencies. Then foreigners have less money to buy gold with due to the unfavorable exchange rate. Which decreases their demand for gold. And the price of gold goes down as result.
And the exchange rate for the US dollar has been going up lately probably due to increased borrowing by the US government. The US government borrows money in US dollars by selling US Treasury bonds. Which means that foreigners who want to buy these bonds must change their money into US dollars first. And his causes their currencies to decline relative to the US dollar.
When foreigners for one reason or another start taking their money out of USA. Then the US dollar would go down, and the price of gold would go up.
Gold price is related to the purchasing power of the dollar. With the price of oil and other commodities falling, the dollar is becoming stronger. With the credit crunch, there is a decline in demand for almost everything, so the law and demand causes gold and all commodities to fall.
Eventually the bailouts will create inflation and gold will go up in value.
Fear based speculation and Inflation.
Look at gold over the last ten years. Heck, look at the chart over the last year. It’s not falling. It’s continuing a march upward. It’s fun to watch the daily moves, check the url i put in with my name for a free app that does it in real time, but when I look at the overall picture and when I see gold setting new highs against foreign currencies I don’t see it falling. In fact, in my opinion it’s starting to take on it’s old role of currency.