Reasons And Factors Causes Fluctuations In Gold Rates

By Author: Jane Cyrus
Total Articles: 106
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Gold, a precious metal adds beauty in the personality of
the persons. It is considered as the best and pure metal which is used in every
good and traditions cause. Gold makes a good relation among the people. Usually
people save gold as their wealth because of its natural high value. This made
it evade against fluctuations in economy. The continuous buying behavior also
results in inflation in price of the gold.

Before purchasing gold, a buyer should know the factors
which affect the price of gold. The factors help the
purchaser to accurately predict whether he is investing in correct thing or not
and also help them to know the trends for the direct investments.

Factors
Influencing Gold Rates:

Demand & Supply – The very first factor which
affects the price of the gold is its demand and supply. This factor is
applicable for all types of commodities. When the demand of the commodity
increases at increasing rates (especially of gold in Asian Market), at the ...
... same
time situation comes when it is become impossible to meet that exact demand
and such cases price of the gold
increases. Also when due to strikes in production houses supply decreases, price of
gold increases. Other than this there are many hidden factors which affect
the gold rates. which we will discuss here namely bank policies,
value of dollar, social conditions etc.

Policies of
Banks – Central
Bank policies on savings and their interest rates also results in price
inflation. The higher interest rate they offer, more people will attract to
invest whereas less interest rate will leads to less purchasing rate of the
gold. This policy followed with all types of commodities and not only with
gold.

Social
Conditions –
Social conditions include war times, emergencies as the value of the currency
remains in doubt. Once the people get to know the actual price they rush to
purchase and wait until the price increases in order to have the profits and
savings.

Value
of US Dollar – The price of gold is also affected by
the value of US Dollar because it is the Global trading currency and all type
of trading is done by considering Dollar as the standard unit.

With the help of all the above
mentioned factors, it will become easy for an investor to invest shrewdly. This
will help an investor to judge regarding his investment and helps him to
estimate the time in which he can invest easily.

If you are wandering to
purchase gold you should first know the price of gold and you
must consider the mentioned factors which will help you to take better decision
while doing your investments.