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What Factors Influence Gold Prices?

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The following article is created and or curated by the Orion Metal Exchange for the benefit of our followers.  We seek to provide relevant precious metals, economic and geopolitical content that can impact your retirement and savings. If you are interested in learning about precious metals investing, call 1-800-559-0088, for a FREE investor kit.

Gold is a precious metal that is used a standard of value all across the globe. Gold price is stated in terms of currency, often in USD, and it can fluctuate depending upon the conditions of the market. But what are the exact factors that influence gold prices in the current market?

If you’re considering investing in gold, it’s important to understand how gold prices are determined and what causes fluctuations. We’ve compiled a list of factors that can influence gold prices.

Global Crisis

In investment circles, gold is often referred to as the “crisis commodity”. This is because its prices tend to rise when there’s volatility in the economic environment, and people are lacking confidence in financial markets and government institutions. Global events often influence gold prices because the precious metal is considered to be a source of safety amidst geopolitical or economic instability.


Inflation is perhaps the primary reason why people invest in gold to act as a hedge against currency devaluation. In comparison to currency values, which can fluctuate drastically, the value of gold stays relatively stable over the long term. Unlike national currencies, gold is a global commodity, which means it holds value outside of national politics. This is why it’s a solid, low-risk investment during times currency value is plummeting.

Value of the USD

The United States dollar is by far the most dominant global reserve currency, which means that it’s the currency used by most countries when they engage in international trade. Gold is weaker when the USD is strong, and vice versa.

Interest Rates

Unlike saving accounts or treasury bonds, gold doesn’t pay interest. However, current prices of gold often reflect fluctuations in interest rates. As interest rates go up, gold prices may come down as people are more likely to liquidate their gold to free up resources for other opportunities of investment. Decreasing interest rates, on the other hand, may cause gold prices to go up as the opportunity cost of holding on to gold is relatively lower.

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