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Gold Angel

What Determines the Price of Gold?

What Determines the Price of Gold?

By the year 1999, gold was not considered as a good investment option at all.  Many countries stared selling gold from their reserves, keeping in mind that gold is no more the best investment idea. But, the things got really changed in the next ten years. One more time, gold became a dependable source to pull the money of investors.

Why did this happen? To get this answer, you must know the factors that determine the price of gold. This article deals with the major factors which push the price of gold in an upward or downward direction.

1. The Dollar value.

The price of Gold is generally quoted in dollars. Its price in most of the time moves in the opposite direction to the dollar value. Thus, if a person puts his money in gold and there is fall in U.S. dollars, then he should earn a good amount from the investment. However, it is not only the dollar that affects the gold price. Other currencies like Euro also have some prominent influence on it.

If you are choosing commodity market as one of your investment options, you should know that the price of gold doesn't move in the same way as other commodities like platinum. These commodities are very much affected by the demand and supply condition, which is not the same in case of gold.

2. Investment Demand of Gold.

In the last few years, investors have started considering commodity market as a good option to put their money in. Banks are playing a role of market maker in this regard. Because of many institutions offering more commodity-linked product to their customers, demand for commodity as an investment option is also going high. This change in demand also affects the price of gold to a great extent.

3. Physical Demand of Gold

Though, the supply and demand of gold affect its price least; the physical demand of gold can strike the money you have invested in it. Unlike money, the inflating supply of gold makes you proud by proving it as the best investment you have made.

4. Central Banks

During the period 1999, when majority of the central banks decided to sell gold, the price fell down to a greater extent. And after ten years, when there was craze to purchase them, it again affected the price of gold.

5. Diversification

The search for diversified investment options to reduce risks, may lead a person towards investing in gold and other investment options like pension funds, hedge funds, private banks etc. It's not only the private investors that look for such investment options; central banks also look for the same. The big news regarding diversification is that it can also make changes to the price of gold.

Along with this, like any other market, the gold market is also influenced to some extent by the sentiments of people. Every piece of bad news in the market comes out as a disaster to your money invested in gold which is totally opposite when there is some good news.

 

 

About the Author

A writer that writes his heart on investment and personal finance related topics. Helping people to decide what is the best investment and what is not. Personally believes that Gold is the ultimate source for almost every investment. Thank You.

Gold coin with an angel on the front an back ?

I got a roll of quarters from the bank and inside was a shiny gold coin with a picture of an angel on the front and on the back. The same picture on both sides and no words. Her wings are open and she has a halo above her head. Under her feet there are clouds and all around here there are lines coming out like rays of light. I've searched on line and can't find anything about this coin. Has anyone ever seen one or had one or know where it comes from ?

First of all it is not a bus token. It is from a religious group that sent them out in the mail in a request for donations. I have seen them before several times and others here have asked this same question. I do not remember the group though for it has been 5 years or more. it is not gold but gold colored. It is a good luck charm so to speak. It is not a coin but a medal. Hope this helps some.

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