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What Determines the Price of Gold?

What Determines the Price of Gold?

The price of gold changes all the time. Day to day and minute to minute, pricing is constantly fluctuating. This can affect when you decide to sell your gold or when to buy new gold. Ideally, you want to buy gold as low as possible and sell it when it is as high as possible. This means keeping your eye on the price of gold and the factors that determine it. Keep reading to learn more about what determines the price of gold and how you can get started investing in gold today.

Supply and the Price of Gold

One of the significant factors that determine the price of gold is the supply of gold. New gold is always being mined, and all of the gold that has already been mined is still in existence. One would assume that there is no issue with the supply of gold, but that isn’t always the case.

Gold has many uses, including jewelry, bullion, bars, and more. When gold is purchased, it is seen as a valuable possession and kept away. Most people lock their gold away in drawers or safety deposit boxes. It’s essentially taken off the market, which causes the supply to go down.

As far as the new gold that is mined each year, ​ global gold mining adds approximately 2,500-3,000 tonnes to the overall above-ground stock of gold. The best estimates currently available suggest that around 197,576 tonnes of gold has been mined throughout history, of which about two-thirds has been mined since 1950. And since gold is virtually indestructible, this means that almost all of this metal is still around in one form or another. If every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only measure around 21 meters on each side.

Demand and How it Affects the Price of Gold

Gold is an ideal asset for just about anybody. Whether you have many different investments in your portfolio or none at all, gold can serve some sort of benefit for you. As such, this keeps gold in high demand. According to Investopedia, investors have long been enamored by gold, and the price of the metal has increased substantially over the past 50 years. Like most commodities, supply and demand are incredibly important, but gold also retains additional value. Government vaults and central banks comprise one important source of demand for the metal. Investment demand, especially from large ETFs, is another factor underlying the price of gold.

Also, according to Investopedia, gold sees demand from exchange-traded funds that hold the metal and issue shares that investors can buy and sell. SPDR Gold Trust (GLD) is the largest and held over 1,078 tonnes of gold in March 2021.5 In all, gold purchases from various investment vehicles in 2019 were 1,271.7 tonnes, according to the World Gold Council,6 representing over 29% of the total demand for gold. While some ETFs represent ownership in the actual metal, others hold shares of mining companies rather than actual gold.

Inflation Numbers

Inflation numbers are a significant factor that helps determine the price of gold. Gold is a hedge against inflation, so when inflation rises, so does the value of gold. When the dollar is weak, gold becomes stronger. For this reason, gold is an ideal asset for individuals who invest in stocks, bonds, or real estate. If the stock market crashes or the real estate market experiences a low, you do not have to worry about your savings. This is because gold will start working for you. As the value of your other investments go down, the value of your gold will go up and will stabilize your portfolio.

As mentioned, when inflation numbers are high, the price of gold goes up. This is an ideal time for you to sell gold if you want to make a significant profit on it. It is the less perfect time to purchase gold, as you will be paying top dollar for it, and the demand will be very high. The good news is you can buy and sell small portions of gold and still keep some in your portfolio.

About Priority Gold

There are many ways to find out the current price of gold, including the price of gold ticker at the top of our website. If you are interested in buying or selling gold at any time, we are here to help you achieve your goals. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.

We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping streamline their precious metals purchases at a fair price, selecting the proper precious metals portfolios, and meeting their essential financial objectives.

We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer, and gold shows up on schedule. Priority Gold guarantees the highest customer service standards, which come with honesty, professional conduct, and the Ethical Code of Business.

For more information, visit us at

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