What Affects The Price Of Gold


Due to the rising price of goods and services, inflation also affects gold’s price. Higher inflation tends to pressure gold’s price higher, but lack of inflation has less of an impact on gold prices. The growing and expanding of the economy of a country can be observed in the level of inflation. The inflation rate can be high if the federal reserve expands the supply of money. Thus, expanding the supply of money decreases every remaining monetary note, making gold more expensive to buy. Resulting in a quantitative easing program of money supply in the gold price.


Political uncertainty or instability is another factor that can move gold’s price. Many factors can contribute to a global growth of uncertainty and also aids in rising gold’s price. The one thing that stockholders have to keep in mind is that uncertainty is not a perceptible statistic like many other factors. It is a psychological factor that investors experience, and it can also differ from one event to the other.

Economic Data

US economic data such as job reports, broader-based data, manufacturing data, wage data also affect gold’s price and influences the federal reserve’s monetary policy decision. A stronger economy has a low unemployment, and higher rates of jobs.Expanding of manufacturers has a tendency to push gold’s price lower. Strong economic growth can lead the Fed to make a move to a narrow monetary policy. However, rising unemployment, weaker job rates, and a lower manufacturing data can increase gold’s price.

Supply and Demand

The supply and demand of gold like any other goods can simply influence the physical gold price as well. Increased demands and a low supply have the power to pull gold’s price higher.An oversupply and weak demands for gold can lead to a lower price. Gold supply only increases by 1% during the first 6 months of 2016, which shows the difference in supply growth since 2008. Rising demands and lack of supply on gold can push its price higher than ever.

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