What Causes Gold Prices to Fluctuate? | Westmont, IL Gold Buyers

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What Causes Gold Prices to Fluctuate?

Gold is a popular business venture for people interested in both selling and purchasing it here at Americash Jewelry & Coin Buyer. However, we know some people get confused when gold prices fluctuate and may feel uncomfortable with the process. Understanding why and when gold prices change can help you prepare for getting your gold appraised or making an investment, ensuring you have the best experience possible.

Many societal factors can cause gold price fluctuation, like economic crises and political changes. Even though gold serves as a strong constant in the complex world economy, its stability may fluctuate when inflation and depression hit. Read through these factors to better understand your investment and minimize any complications.

How Does the Gold Market Work?

The gold market is driven by global demand and supply, plus investor practices. For example, when gold demand is high but its supply is low, prices may increase because there isn’t enough available gold for investors to buy. If investors are uncertain about gold value during these boom times, however, prices may stay the same instead. Gold also provides a universal currency for multiple nations, as they can measure all local coinage against it.

How Do Economic Crises Affect Gold Price Fluctuation?

Gold prices often skyrocket during economic crises like the Great Recession of 2008 because the value of the U.S. dollar plummets. Typically, the U.S. dollar is the standard measuring tool for all other investments. When the U.S. economy is weak, and the dollar isn’t strong, gold provides an alluring investment alternative. That’s because gold values have more protection than regular currency, meaning your reserves have the same profitability — or more — during uncertain times. You may see price increases in a variety of gold-related markets around the world as gold becomes a commodity, including:

  • Gold IRAs.
  • Exchange-Traded Funds or Gold ETFs.
  • Gold-producing company shares.
  • Physical gold reserves.

Individuals can invest in gold in many markets. If you have gold reserves during an economic crisis, saving them can also help you preserve stable funds until the economy rebounds, at which point you can sell them for a profit.

How Does Global Politics Affect Gold Price Fluctuation?

The world’s political climate can vary heavily from year to year. When political problems or conflicts arise, such as tensions between nations or even wars, gold prices typically increase. That’s because the value of regular currency decreases while the value of gold is more likely to stay consistent, meaning investors see it as a secure venture.

For example, when tensions between countries cause sudden stock market crashes and recessions, gold remains stable because all countries value it. As a result, it serves as a buffer from economic collapse and typically goes up in value during these times. However, it’s important to pay attention to when political situations improve and when these tensions decrease in intensity. That’s because political and economic stability typically causes gold prices to decrease, as paper currency regains its value after these crises end.

What Other Factors Influence Gold Value?

These factors may also heavily affect gold prices around the world:

  • Gold supply: When gold supplies decrease because of mining-related concerns, gold prices are often affected. It’s a basic supply and demand situation. Gold remains in high demand around the world and when there’s less available, prices naturally go up.
  • Central banks: Central banks around the world hold that hold both paper currency and gold will occasionally decrease their gold reserves because it has no return value. When this decrease happens, gold prices fall because investors are disinterested.
  • Monetary policies: Federal Reserves around the nation can cause gold prices to fluctuate simply by changing interest rates. When they increase interest rates, the price of gold may decline in response. The reverse happens when banks lower them instead.

Buying and Selling Gold for Profit 

These factors may make investing in gold seem overly complex or difficult. Nothing could be further from the truth. If you learn more about the gold market and talk to our  expert staff at Americash Jewelry & Coin Buyer when selling or buying gold, you can find a rewarding process that’s easy to navigate.

Follow the steps below to get started:

Do Your Research

Carefully researching your gold buying options is a wise choice. Do you want to buy physical gold like jewelry or buy into gold stocks and futures? First-time buyers are likely better focused on physical gold products because they’re less expensive and easier to find. Before buying, also decide on your risk tolerance, including how much you’re willing to lose.

Buy Jewelry, Bullion, or Coins

Identify jewelry, bullion, or coins that are within your price range from different gold sources in your area. Try to focus on buying purer gold and more refined options, as they typically have higher resale prices. Find a place to store these items long term as you wait for ideal gold prices, such as a rented bank vault that protects your wares. You can also store gold in a private safe at home. Just be sure it’s waterproof, fireproof, and stored in a secure location. 

Hold on to Your Gold

Buying gold when the value is low gives you time to hold on to it and wait for a price increase. Often, gold investments are a long-term process. Just remember this simple fact. In the 1990s, gold prices were at barely $300 an ounce. About 10 years later, prices were as high as $800 or more per ounce. Patience is key here, so make sure you expand your other investments before taking your gold in to sell.

Bring in Your Gold To Sell

After gold fluctuates to an optimal price range, it’s time to sell. Consider sending information about the item to us online for a small $10 fee. That way, we can appraise its value and make an offer. If you visit our store instead, one of our staff members will be happy to help you. We offer immediate cash payments, meaning you’ll walk out with cash on the same day you visit.

So there you have it. We’ve let you know the reasons for gold price fluctuations and provide a useful guide to buying and selling it. Do you have any more questions about the selling process? Visit our website for more information, including what type of gold we’re especially looking for. You can also contact us online or call our line at 630-296-9639. We offer the highest gold prices in the Chicago area and want to give you the strongest return possible on your investment.

Image via Flickr by AZAdam  | Licensed by CC BY-SA 2.0

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