Many people view Gold as a safe investment, especially during economic uncertainty. This precious metal has been used as a form of currency for centuries; its value has only increased over time. So, when is the best time to buy Gold?
There are a few things to consider before making any investments, including the current state of the economy and your personal financial goals. In addition, Gold prices can be affected by various factors, including central bank policy, inflation, geopolitical events, and demand from jewellers and other industries.
Let’s take a closer look at some of the events that can impact the price of Gold.
Central Bank Policy
One of the most important factors that can impact the price of Gold is central bank policy. In recent years, central banks worldwide have increasingly turned to Gold as a reserve asset. This means they are buying more Gold to hold onto their balance sheets.
The central banks’ demand for Gold affects the supply and demand in the market, which in turn impacts the price. When central banks buy Gold, it takes it off the market and increases the cost. On the other hand, when they sell Gold, it adds to the supply and puts downward pressure on prices.
Inflation
Another factor that can impact gold prices is inflation. When inflation goes up, so does the price of Gold because it retains its value better than other assets such as stocks or bonds. So investors turn to assets like Gold that will hold their value better over time.
Geopolitical Events
Geopolitical events can also have an impact on gold prices. For example, tensions in North Korea or trade disputes between the U.S. and China can cause investors to flock to safe-haven assets like Gold. When there is uncertainty in the markets, investors tend to move their money into assets that are seen as being more stable.
Covid 19
The pandemic caused Gold prices to increase by more than 25%. In the past, Gold prices had been relatively stable, but the outbreak of Covid-19 led to a sharp increase in demand for the metal. Investment banks and hedge funds bought Gold as a safe haven asset, and central banks also increased their Gold reserves. The increased demand led to a shortage of Gold, and prices continued to rise in the short term. In the long term, however, Gold prices started to return to their pre-pandemic levels as the pandemic subsided and economic activity picked up.
Demand from Jewelers and Other Industries
Another factor that affects gold prices is demand from jewellers and other industries that use Gold in their products. For example, if there is an increase in demand for wedding rings or cell phones, this will lead to higher prices for Gold because more businesses will be competing for limited supplies of the precious metal.
In summary, Gold prices are affected by various factors. Therefore, when considering whether or not to invest in Gold, it’s essential to consider all of these factors before making any decisions.
We are always happy to advise you when you are looking to make your first investment.
