Gold is considered one of the most important economic and investment elements in the world, and its value is affected by multiple economic and political factors. In this article, we learn about the most important factors that lead to its value rising or falling, such as supply and demand, the global economy, interest rates, and others.
- Supply and demand
The forces of supply and demand play a fundamental role in determining the price of gold. High demand with high supply leads to higher prices and vice versa. While the world is experiencing economic instability , many are turning to gold as a safe haven, which enhances demand and leads to higher prices.
- Inflation
As the price level increases, and the purchasing power of the currency decreases, individuals need to pay larger amounts to purchase basic needs. Thus, the value of the work in circulation decreases, and the demand for work that is safe and maintains its value increases, especially gold.
- Dollar prices
The dollar affects the price of gold, and there is an inverse relationship between them. The higher the price of the dollar, the lower the price of gold, and vice versa. When the value of the dollar declines or when its stability is lost, people tend to buy gold and invest in it in search of financial security. The opposite may happen. When the value of the dollar increases, the value of gold decreases, so some people tend to buy and invest it more than gold, and this is due to personal decisions and preferences.
- Interest policies
Central banks' decisions to raise or lower interest rates, whether to stimulate the economy or combat inflation, lead to changes in gold prices. The higher the interest rate, the lower the purchasing value of gold. The lower the interest rate, the more people are encouraged to spend, thus increasing demand and thus increasing purchasing value.
- The political situation
Political conditions and geopolitical tensions greatly affect the gold market and its prices, and gold is witnessing an increase in demand at these times, especially with the collapse of the currency, and negative expectations regarding these conditions.
-Alternative currencies
Digital currencies such as Bitcoin and others are an important element in the financial landscape, and their emergence has led to fundamental changes in the world of investment. These currencies and their value may affect investors’ interest in gold, whether negatively or positively. Some people see these currencies as digital gold, and some prefer the gold metal itself.
-Modern technology and industries
Gold is an essential part of technology due to its unique properties of electrical conductivity and chemical stability, which makes it an ideal material for use in several fields such as medicine, aviation and aerospace. Any development in technology leads to an increase in demand for gold and thus an increase in its value.
Finally, the value of gold is rising in today's markets as a strong indicator of the current economic and geopolitical conditions, and it remains a safe haven for those wishing to preserve their private capital, and for investors wishing to achieve a high profit return or diversify their investment portfolio.