There are a host of factors that impact gold demand and pricing. Many have to do with the economy and various related points. While economies around the world are pretty steady right now, there are some important points to watch that might clue investors into changes that may occur.
Watch the Demand for Spot Gold
A strengthening economy means that people are willing to spend more money on luxury items like jewelry. Spot gold demand increases when this occurs because jewelers need more gold to make their wares.
When the demand for spot gold increases and the economy strengthens, gold futures might start to dip. This occurs when investors get rid of gold ETFs in an attempt to free up space for other investments. Investors suddenly dumping gold can make the price of gold dip even more since the supply increases without the demand increasing.
Pay Attention to Politics
Political matters across the world can impact gold demand and prices. Major political shake ups — think of those on the level of the surprise election of President Trump or Brexit — make people think about finding ways to remain stable. Often, these major changes lead to investors deciding to invest in gold, even if they have never done so previously. This drives up demand, which can pull gold prices upward because the demand will decrease the available supply.
Stay Alert for Disasters
Terrorist attacks and natural disasters often lead to an increase in gold investing. People who see these events might decide to stash money away in a safe investment. They usually want something that isn’t easily destroyed and has fairly stable prices and futures. They want something to sell quickly if they need money to cope with the after effects of a disaster.
Where Gold Demand Stands Now
Currently, the economy in the United States is improving. The Fed has been making tweaks to the interest rate in the country. Since the U.S. dollar strength is a primary factor in the gold market, everything going on in the country can impact gold.
London’s gold holdings also have a major impact on the market, so it is imperative to watch how Britain handles the changes coming with Brexit.
Overall, the months ahead are going to see some fluctuations in gold prices. As long as no major economic or political bombshells occur, fluctuations shouldn’t be major.
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