Reasons/factors that affect gold price to rise and fall?
Gold behaves like most commodities: its price rises and falls according to its utility and scarcity. Some people believe that gold is a useful hedge against inflation; this conventional wisdom arises out of the history of the US dollar, which was once pegged to gold (the Gold Standard). In actual practice, gold has proven itself to be a rather lousy hedge against inflation, probably because it has limited intrinsic value. By this I mean that its actual utility is limited. It looks nice, but you can’t eat it. In the past, gold has done well when there has been increased industrial demand for it, or during periods of US dollar weakness. Having said that, there are more than a few alternatives for protecting yourself against currency collapse or general inflation. Minerals with greater utility (palladium comes to mind, or even uranium!) are worth considering. So, while you might make a general statement that gold rises in price when there is inflation or currency weakness, following this
Gold is a monetary metal whose price is determined by inflation, by fluctuations in the dollar and U.S. stocks, by currency-related crises, interest rate volatility and international tensions, and by increases or decreases in the prices of other commodities. The price of gold reacts to supply and demand changes and can be influenced by consumer spending and overall levels of affluence.
