Factors affecting the price of gold - DOC - DOC

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					Factors affecting the price of gold
Gold price changes, most of the reason is supply and demand by the impact of the
gold itself. Therefore, as a principle of their investments investors should be aware of
any possible factors that affect the supply of gold to further understand the dynamics
inside the other investors, the trend of gold price forecast to achieve a reasonable
investment of purpose. The main factors include the following:
(1) the dollar
Although there is no gold dollar as a stable, but it is higher than the mobility of gold is
much better. Therefore, the dollar is considered the first category of money, gold is the
second category. When the uncertain international political tensions, people would
rise in anticipation of gold will buy gold. But most people remain in their own hands,
in fact the dollar currency. If the country during the war need to buy weapons from its
country, or other supplies, will be short selling in the hands of gold, in exchange for
U.S. dollars. Thus, political instability during the U.S. dollar may not rise, but also the
U.S. dollar. In short, strong gold on the weak U.S. dollar; Huang Jinjiang on the weak
Investors are usually guaranteed savings only when the gold will be taken care dollars,
U.S. dollars will take care of gold. Gold, while not legal tender, but always have their
value, not depreciate as scrap metal. If the strong dollar, U.S. dollar investment
opportunities for large, it is natural to chase dollars. On the contrary, when the dollar
weaker in the foreign exchange market, the gold price will become stronger.
(2) The period of war and political turmoil
Period of war and political turmoil, economic development will receive a significant
constraint. Any local currency, all as may be due to inflation and devaluation. At this
time, the importance of gold to play maxed out. As the recognized characteristics of
gold, for the internationally recognized medium of exchange, in this moment, people
are turning to gold. On the gold rush, causing the price of gold will inevitably rise.
But there are other factors also constrained. For example, in 89-92 years, the world
has witnessed many wars and political instability and sporadic, but the gold has not
made up. The reason is that all holders of U.S. dollars, give up the gold. Therefore,
investors should not apply the machinery of war factors to predict the price of gold,
but also the U.S. dollar and other factors.
(3) the world financial crisis
Should there be a world-class bank collapses, gold will react?
In fact, this situation occurs because of a crisis situation. People naturally will keep
money in their hands, a large number of runs on banks or bankruptcy. As the situation
shortly before the economic crisis in Argentina as the country's people
should exchange U.S. dollars from the bank, but the state to retain the final
investment opportunities, banned the U.S. dollar, which has been the riots took place
across the country into a panic.
When the United States and other Western powers of the financial system, the
phenomenon of instability, the world will invest in gold funds, gold demand, gold
which will rise. Gold in time to play safe haven function. Only in the case of financial
system stability, investor confidence will be compromised for gold, sell gold cause
gold decline.
(4) inflation
We know that a national currency of purchasing power, is determined by the price
index. When a country's price stability, the purchasing power of its
currency more stable. On the contrary, the higher the inflation rate, the more weak
purchasing power of money, the more the currency less attractive. If the United States
and major regions of the world price index remained stable, cash will not be devalued,
but also interest income, is bound to become the first choice for investors.
Conversely, if severe inflation, holding cash is no guarantee, interest charges are also
not keep up with skyrocketing prices. People will purchase gold, because this time the
theoretical price of gold will rise with inflation. Major Western countries, higher
inflation, in order to preserve and increase the demand of gold for the greater, the
higher will be the world's gold. Among them, the U.S. inflation rate is
about the most likely changes in gold. Some smaller countries, such as intelligence,
Uruguay, the annual inflation rate can reach 400 times, but then no effect on gold.
(5) oil prices
Gold itself is under inflation hedge products, with U.S. inflation inseparable. Oil
prices means that inflation will follow, gold will follow up.
(6) local interest rates
Investing in gold does not earn interest, the profitability of their investment depends
prices. Low interest rates, the measure of under investment in gold would certainly
benefit; but interest rate rises, interest charges will be more attractive, interest-free
investment value of gold will drop, since the greater the opportunity cost of gold
investment, than on the banks to charge interest on it more stable and reliable.
Especially the United States interest rates rise, the dollar will be a lot of absorption,
gold will inevitably frustrated.
Interest rates are closely linked to gold, if a higher national interest, we must consider
whether it is worth the loss of interest income to buy gold.
(7) economic conditions
Economic prosperity, people living at ease, naturally enhancing people's
desire to invest, buy gold to hedge or civil decorations will be in much increase in
price of gold will get some support. On the contrary, under times of hardship, the
Depression, people with food and clothing can not meet basic security, but also where
there will be investment interest in gold then? Gold is bound to decline. Constitute the
economic situation is also a factor in the gold price fluctuations.
(8) gold supply and demand
Gold is based on supply and demand basis. If a substantial increase in gold production,
gold would be affected and down. But if there is a long miners strike and other
reasons to increase production to stop price of gold will be in demand than supply, the
case of appreciation. In addition, the new gold mining technology, the discovery of
new mines are made of gold supply increased, reflected in the price of gold will fall of
course. A local investment in gold is also possible the wind study, for example,
there's gold in the investment boom in Japan, be greatly increased, but also
led to prices climbing.
The basic analysis for the gold trend has many aspects, as we use these factors, we
should take into account the role of their respective strength in the end how much.
Find the status of each factor and impact of primary and secondary time to make the
best investment decisions.
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