Cultural and seasonal factors. Indian and Chinese cultures value the use of gold in cultural and religious practice. For example, demand for gold in China usually experiences a hike before the Lunar New Year, when private individuals buy gold as presents for the annual festive period.
Monetary policy. Central bank policies on gold and interest rates can affect gold prices. Higher interest rates can lead to an easing in demand and encourage people to sell gold as prices start to drop.
Global volatility. When there’s high volatility in world markets, investors tend to turn to stable investments such as gold. Central banks, too, buy and sell gold to maintain their official gold reserves and in order to manage foreign exchange risk. Gold is one of the highly valued precious metals (or safe-haven assets) for hedging against financial stress, whether it’s inflation, deflation, or currency devaluation.
Global volatility. When there’s high volatility in world markets, investors tend to turn to stable investments such as gold. Central banks, too, buy and sell gold to maintain their official gold reserves and in order to manage foreign exchange risk. Gold is one of the highly valued precious metals (or safe-haven assets) for hedging against financial stress, whether it’s inflation, deflation, or currency devaluation.
Prices. High prices can cause investors to sell gold when prices reach a level where their ideal return on investment has been met. Similarly, low prices can encourage investors to buy gold while prices are relatively affordable but likely to increase.
Production. Many countries don’t produce enough gold to meet their consumption, investment, or industry requirements to buy gold.
Major currencies. The movement of major currencies can have an effect on gold prices as currency trading and gold are investment alternatives. The US Dollar is the most-traded currency in the world, and a high US Dollar tends to boost demand for the US Dollar. Gold prices tend to rise in times when investors turn away from currency trading.
Production. Many countries don’t produce enough gold to meet their consumption, investment, or industry requirements to buy gold.
Major currencies. The movement of major currencies can have an effect on gold prices as currency trading and gold are investment alternatives. The US Dollar is the most-traded currency in the world, and a high US Dollar tends to boost demand for the US Dollar. Gold prices tend to rise in times when investors turn away from currency trading.
Seasoned investors study the market by examining these factors when choosing whether to buy gold or sell gold.
More information can be found online at http://www.goldbullionadvisors.com
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