Factors That Affect Gold Consumption Patterns Around the World
Gold has held the fascination of human societies since the beginning of time. As metals, gold and silver, universally hold different intrinsic values for people for a myriad of reasons.
They’re considered a symbol of wealth, have notions of religious and cultural values attached to them, and can be used for the purposes of financial security or investment.
Given its non-corrosive nature, gold is one of ‘the most sustainable store of value.
‘Gold’s diverse demand and uses in different sectors added to its prominence at different points in the global economic cycle, underpinning its robust qualities as an investment asset.
According to a report by the World Gold Council, two significant factors that affect gold’s consumer demand are income and prices.
Perpetually, a 1% increase in per capita income results in a 1% increase in purchasing trends.
Similarly, high gold prices proportionally deter gold purchases, causing fewer people to have the purchasing power to buy gold bullions.
Let’s look at the three most common factors that influence gold consumption patterns around the world.
Historically, when inflation rises, the value of the currency goes down, and the gold prices increase sharply.
A survey conducted with central banks to examine motivations behind the expansion of gold holdings revealed that 55% of people believed precious metal’s function as a protection against inflation.
When inflation remains high over a more extended period, gold becomes a tool to hedge against inflationary conditions; hence the demand for gold increases inherently.
In our globalized society, crises are hardly ever limited to one particular region without impacting the rest of the world.
Be it Brexit, COVID-19 turmoil, the Soviet Union’s invasion of Afghanistan, or the US presidential elections of 2020.
Since stock markets covet certainty, they tend to crash easily due to these global instances; this becomes an eminent reason for gold demand and price fluctuations.
Amid economic or geopolitical tumults, investing in gold to make money is considered a safe and lucrative opportunity.
Gold, as a liquid investment commodity, provides substantial protection to individuals in times where most economies are highly volatile.
Being a finite resource, the actual value of gold irreverently remains relatively stable in the long run, making it an attractive investment tool.
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