Gold rates have risen to US$2000 per ounce due to signs of a global slowdown. Gold is gaining in popularity due to high inflation, growing geopolitical issues, and fear of recession. In the next few months we should expect gold prices of 1oz will reach record levels. Gold prices have declined as US Central Bank began its hike cycle. However, on June 15th 2022 spot gold rates will surpass US$1,840.
What is the gold price?
Gold is traded on the precious metals market, so its price changes daily. It is determined by market demand. Gold prices are affected by a number of factors. Some of them are:
Central Bank Reserves
Reserves are held by central banks in gold or paper currency. Gold prices increase when central banks begin to buy more gold in order to diversify their holdings. Gold reserves are higher in many countries around the globe.
US Dollar Rate
In the past, gold prices have been in inverse proportion to US Dollars. When Dollar rates drop, the gold rate rises and vice versa. Investors park their money on gold as a hedge against currency market fluctuations. Gold is used as a hedge to protect against market volatility and inflation. The price of 1oz gold will rise when US Dollar rate is lower.
Gold as industrial use and jewelry is in high demand
In 2019, about half the demand for gold was used to make jewelry. China, India, and the US are the three largest gold consumers. Gold is used in the production of precision electronic devices, medical devices, and other products. The demand for gold and the supply affect its price and the daily fluctuations of the stock exchange. The gold jewelry price is however higher than spot gold. This is because the gold jewelry rate includes a higher premium for making costs. Gold jewelry will not likely fetch more than today’s market price because of the deducted amount of metals or silver used to create the piece.
Investment demand
Banks, as well as some commodities dealers, are authorized to sell gold bullion bars and coins. Exchange traded funds are also available. Authorized dealers are the best place to purchase gold bars , since they have authentic products that come from international banks and mints. Banks, financial institutions and wealthy individuals tend to buy gold in bars. Smaller gold bars, however, are more popular among individual investors due to their lower price and ease of storage.
Gold production
China, South Africa and the US are all gold mining countries. The production of gold affects the supply and demand. Gold mining hasn’t increased significantly in the last decade. This is why prices have risen.
The majority of mining companies produce gold bars, and distribute them around the globe. Gold bars can be purchased from dealers who trade in gold bars.