Currently, gold is not only the most sought after for investment purposes and also for the jewelry market, but it is also used for the manufacture of certain medical devices and electronic devices. There are many factors that drive the change in prices of this precious metal.

central bank reserves

The Central Bank has paper money and also gold in its reserve. Also, the world gold council has stated that all central banks have recently started buying more gold than they could be selling. As all central banks have diversified their monetary reserves away from paper currencies and hoarded them and turned them into gold, gold prices have continued to rise.

The value of the US dollar

The price of gold is primarily inverted based on the value of the US dollar. This means that a strong US dollar means that the gold price will be more in check and will also stay at a lower rate. A weaker US dollar is also likely to drive the price of gold much higher. This is mainly because most people tend to trade in dollars and also invest when the dollar is strong.

Global demand for jewelry

In a 2010 survey, jewelry accounted for approximately 54% of gold demand, and this amounted to around 3,812 tons. The United States, China and India are the largest consumers of jewelry gold in terms of volume. Also, consumer demand in China has reached 200 tons and this is a big increase compared to last year. Also, gold prices can be affected by the basic theory of supply and demand, as demand for consumer goods like electronics and jewelry increases, the cost of gold can also increase significantly.

wealth protection

During uncertain economic times such as seen during the recession, more people have turned to investing in gold due to its very enduring value. Gold is also often seen as a safe haven for investors in uncertain times. Furthermore, when the actual and expected returns on bonds, real estate and stocks, the interest in investing in gold increases significantly and this is the reason why its price soars.

The recent recession has sparked a gold rush in modern times. Even a TV show on this similar topic had gotten around 4 million viewers. It is one of the important things to remember.