The most critical factors controlling gold prices
Supply and demand
Supply and demand affect gold prices like any other commodity—increased demand and reduced supply lead to higher prices, and vice versa. Higher supply and lower demand lead to lower prices.
It should be noted here that gold mining is becoming increasingly complex over time, which is one reason for the constant rise in its long-term prices.
Inflation, interest rates, and currencies
Government decisions in this regard affect prices. Low-interest rates and high inflation lead to higher gold prices.
The same applies to exchange rates, and if the local currency is weak, there is an increase in gold prices.
Geopolitics fluctuations
Political instability, conflicts, and terrorist threats may increase gold prices. Measuring how such matters affect gold prices compared to previous factors is challenging and varies from case to case.
Many economists have linked the recent rise in gold prices to the Russian invasion of Ukraine. Many investors have begun to refrain from buying risky assets and have proceeded to purchase gold alloys (the prices of which, according to Reuters, increased by more than 12 percent this year), as they are considered safe investments in times of geopolitical volatility and high inflation.
The well-known Irish writer George Bernard Shaw, in his book “The Guide of Smart Women to Socialism and Capitalism,” said, “You have to choose…Between confidence in the natural stability of gold, the natural stability of the secretariat, and the intelligence of government members. Given the current capitalist system, I suggest voting for gold despite these gentlemen’s opinions.
The old relationship between gold and the dollar continues to affect markets. It is common knowledge that this relationship is counterproductive. A rise in the dollar means a fall in gold, and vice versa.
Fall back the gold.
Gold prices continued to fall during today’s Wednesday deliberations for the eighth consecutive meeting after failing to form a price base and stopping falling during yesterday’s session. This was owing to American data that increased the strength of the United States dollar and record government bond returns.
At the time of writing Gold Billion’s technical report, the prices of immediate gold were traded at $1822 per ounce after the lowest level of the day at $1816 per ounce. This comes after yesterday’s gold fell by 0.3% and was the lowest level since last March’s $1815 per ounce. Since the beginning of the week, gold has dropped by 1.4 percent, losing $26 to complete the record decline of $4 percent during the past week, during which it lost $77.
Gold tried to stop the fall and build a price base in these areas, exploiting news of the Japanese Central Bank &’s support for the yen in the currency market, having dropped against the dollar to 150 yen per dollar to reduce dollar gains. Still, the impact of this move on currency markets quickly ended up again to recover to record its highest level this year, above the $107 marker, after employment data on the United States economy during August showed a rise to 9.61 million jobs above the previous reading of 8.92 million, according to Gold Billion ' s analytical vision.
Jump in the dollar index.
Since the beginning of the week, the United States dollar index has risen by 0.7%, reaching the 12th consecutive week in its longest series of rises in decades. This is supported by expectations that US interest rates will continue to be high for a longer period of time.
The rise in the dollar has contributed mainly to the continued decline of gold during yesterday’s trades. In addition, 10-year revenue from United States government bonds has risen and registered the highest new level since 2007 at 4.884 percent.
Higher bond returns increase the cost of opportunity for non-returned gold and higher levels of the United States dollar, which is inversely associated with gold as a dollar-priced commodity.
Markets are waiting for other vital data on the United States economy. The ADP index of United States private sector jobs was released in September. It is expected that 154,000 jobs will be registered in less than the previous reading. 177,000 jobs. The ISP index for September is expected to show a growth of 53.5 fewer than the last growth of 54.5.
Investment demand for gold remains weak during the current period, but actual demand for gold remains an essential support for gold. In China, demand has risen sharply, pushing China’s domestic gold price to far outrun the price of gold in London and New York after domestic sales rose 30% compared to last year.
