Gold Price

It is common that gold price appreciates faster than most other investments. However, the question of how fast and how much depends on different factors. Understanding these will help you in deciding whether to sell, buy, or just sit on your gold bullion investment. These factors include world market, inflation, demand and supply, and so forth.

The biggest driving forces of price of gold are supply and demand, and speculation, of course. Between supply and demand, demand (sentiment) plays a bigger role in determining gold prices than does supply (production.) One difference between gold and other commodities is that saving and disposal has more weight on the price of gold than consumption does.

World Gold Council estimates that in the last few years annual mine production of gold has been in the neighborhood of 2,500 tonnes. Around 2,000 tonnes went into jewelery and industrial dental production, the rest 500 tonnes went to retail investors and exchange traded gold funds.

Central banks, along with the International Monetary Fund, also play a significant role in gold price. The Washington Agreement on Gold (WAG), which went into effect in September of 1999, has put a limit on gold sales to 500 tonnes per year by its members, that include United States, Australia, Europe, Japan, Bank for International Settlements and the International Monetary Fund. This limit controls the price of gold and impedes over saturation of this precious metal.

Gold Chart

Gold Chart