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Cost Of Gold Bullion - 5 Factors Affecting The Cost Of Gold Bullion
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There are many factors affecting the cost of gold bullion and such factors are vital to the people who are interested in trading gold. If you have some knowledge in Economics, you should know that the prices of commodities are affected by the demand and supply in the market. Likewise, the price of gold can be affected by demand and supply. However, there are in fact many other key factors affecting the gold price.

How will the demand and supply affect the cost of gold bullion? Demand for gold can change. For example, when there is an increase number of people buying gold, demand in the market increase. And when demand increase, price of gold bullion will naturally increase to reach equilibrium in the market. Hence, you should also be aware that when demand decrease, the price of gold bullion decrease. Similarly, the price can be affected by the supply of gold bullion in the market.

Apart from the demand and supply, the following 5 factors can also affect the gold bullion price.

1. Central banks

The decisions made by the banks about gold and other policies related to interest rate can affect the up and down of gold prices. For instance, if the interest rate is low, people will tend to purchase more gold and hence, driving the price up. On the other hand, people will go for currency investment when the interest rate is high.

2. US Dollars

If you were to observe, you would discover that the price of gold bullion moves in an opposite direction as compare to the value of US dollars. Being a currency which is traded internationally, the US dollars have a great influence in driving the gold rate up or down.

3. Sentiment of People

This is about the feeling and opinion towards gold in the market. Professionals like Analysts and Market Consultants can have great influences in the market. With speculation affecting the sentiment, the price of the gold bullion can be affected.

4. The Economy

Generally, the rate of gold bullion will increase when the state of economy in the country come to a doldrums. People tend to buy more gold for investment and thus, driving the price of gold up.

5. The Policies of the Government

Certain policies made by the government can have direct or indirect influence on the rate of gold bullion. When a policy eventually led to debt deficits, the people of the nation will choose to invest in gold for more security. Of course with the increasing number of purchase in gold, the price will shoot up.

If you have plans to invest in gold, you should constantly observe the cost of gold bullion. You should also learn the many different factors affecting the gold bullion’s price. By knowing the determining factors, you will definitely be in a better position to make better decision as to buy or sell your gold bullion.


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