If you are new to dealing with gold, you might be surprised to find out that the price can fluctuate. This might surprise you as gold is certainly nothing new. Often, it is used for investment purposes, as well as in jewelry, electronics, and even dentistry. So what drives the fluctuation? Let’s take a look.
The Central Bank Reserves
Central banks hold both paper currencies and gold. In fact, banks around the world participate in this practice, including those in the US, Greece, Germany, France, and Italy. The reserves created by this affect the cost of gold. As the central banks buy more gold but sell less of it, the price of gold increases around the world. In addition to this, the value of the U.S. dollar is typically inversely related to the price of gold. When the dollar is stronger, the price of gold is lower and more controlled. When the dollar value decreases, however, gold sells for more.
Jewelry and Industrial Demands
The U.S., China, and India are among the largest consumers of gold when it comes to jewelry. In 2010, 54% of the gold on the market was generated by the demand for jewelry. Industrial and medical use for gold generated another 12% of the demand. Why is this important? The basic concept of supply and demand affects the price of gold as well. This is true even during an economic downturn. In fact, when the economy appears uncertain, more investors turn to gold because it will always have at least some value. Gold, as a “safe haven” for investors, helps them to hedge their funds against inflation and deflation as the economy struggles.
Mining for gold has become harder as the world has exhausted the easier-to-access supplies. As the gold is removed from the upper levels of mines, businesses around the world are having to dig even deeper, exposing miners to more hazardous conditions. This means miners have to work harder to find fewer amounts of gold. As a result, gold prices are being driven up.
Gold Appraisal in Salt Lake City
If you are in the Salt Lake City area, it is easy to find out the value of your gold. Our staff provides professional, expert services for all your gold needs. We offer gold appraisal in Salt Lake City at current fair market values. Stop by our store today.