Gold remains a highly sought-after commodity all across the world, and the success of numerous markets hinges on the price of gold. But what exactly goes into determining the average price for gold?
Here are just a few factors for you to consider when buying or selling gold at a pawn shop in Olathe, KS:
- Demand: Of course, demand is one of the most crucial factors in determining the value of any object, so it only makes sense that it is one of the most important factors in determining the price of something as sought-after as gold. The demand for gold generally comes from its beauty, though there are some practical uses for the precious metal as well.
- Protection against market volatility: There are a lot of people around the world who use gold as an investment to protect against the volatility of national or global markets. Gold generally has a much more stable value than traditional currencies, so there are a lot of people who extoll the virtues of gold investing as a means of building and protecting wealth. Should the market go through another recession, the principle is that the gold will maintain its value much more than money stored in a savings or investment account.
- Interest rates: Industry experts often point to a negative relationship between gold and interest rates. A rising yield indicates there will be an expectation of a stronger economy, which also means rises in inflation. Gold can be used by investors as a hedge against inflation as well as against market volatility. As interest rates start to rise, investors will seek out more fixed-income investments to produce a fixed return, whereas gold does not produce such a return.
- Geopolitical factors: International news and events can shape the value of gold on the global market, because gold is mined and used all over the world. Gold actually tends to do quite well in terms of value during geopolitical turmoil. When there are more international crises or wars, the value of gold will rise, because more investors will see it as a means of safely protecting their assets due to its ability to remain stable even in the face of market volatility.
- The value of the dollar: Gold and the dollar have an inverse value relationship. When you consider the fact that the value of gold rises during times of volatility and strife, this means a strong dollar will reduce the demand for gold. A falling dollar increases the value of currencies in other countries, which in turn increases the demand for gold and other commodities. Therefore, a weak dollar can actually be good news for gold investors.
These are just a few of the factors that go into determining the current value of gold on a national and international scale. For more information about gold investing and why it can be a good tool to hedge against potential market volatility, or to check out the gold pieces we currently have in stock, contact the team at Harrison Street Pawn or visit our pawn shop in Olathe, KS today.