Why is the price of gold being either grawn or fallen?

At present the situation is such that the value of gold depends not on industrial demand, but on how often yellow metal is used as a financial instrument, in particular the instrument of hedging against inflation. Analysts in the matter are united – the price of gold depends on demand, instead of on the offer. Besides, it is influenced by a set of various factors, among which: geopolitical situation, exchange rates, the level of inflation, demand and gold mining volumes, etc.

Among the recent events which have positively affected to the value of gold, there are the discussions developed in the USA concerning formation of the federal budget for 2014 and increase of an interest rate by the Federal system of the USA. Escalation of the Syrian conflict and probability of military intervention of the United States in its decision became a "good" push for rising in prices of gold. It should be taken into account and that fact that gold value is sensitive not only to the occurred events, but also to those which can occur in the nearest future.

Responsibility for gold growth or falling is often put on inflation. Under the influence of this basic factor the price of gold can go promptly up or fall down and the reasons of this fact are the following: release of flat money, which also called fiat, becomes as logical result of inflationary processes. And thus as gold volumes remain invariable, the value of precious metal is increased.

The same process only, but upside-down, is observed at decrease in the level of inflation. However, it is happened and so that the price of gold doesn't react to inflation – those investors are guilty in it, who go on various speculative tricks for the purpose of artificial increase of the value of yellow metal. As a rule, these games lead to nothing good, and sooner or later the so-called speculative bubble bursts, and the price of gold falls.

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Emgoldex team