Gold prices change every minute, every day. Even tiny fluctuations in price can make a huge difference in the big picture. So why do gold prices change, and what affects gold prices?
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Like any other commodity in the market, gold prices are also determined, simplistically speaking, by demand and supply. However, gold consumption for the past many years has increasingly outweighed the production of gold. How then are gold prices controlled and stabilised?
Most of the gold that is already mined and out there in the world is owned by reserve banks of various nations. Gold reserves, when bought or sold by various banks, can create a surplus of gold available in the market and therefore affect the price of gold worldwide.
As ever, gold prices are on the rise today. Even as we speak, financial markets around the world are facing a tough period and are nowhere close to recovery as yet. In this climate of economic uncertainty, investing in something solid such as gold is proving to be a more popular option among investors.
In summary, gold prices are determined by trade in the gold and gold derivatives markets. Various extrinsic factors such as global financial and political situations also affect the price of gold. During uncertain financial times and a weakening US Dollar, gold investments are a popular and safe option among investors.