International gold prices depend on many factors, including demand and supply, economic conditions, currency volatility and geopolitical events.
As gold prices reach new heights, yellow metals hit Rs 95,000 on Wednesday, the natural question is: How to determine international gold prices? Prices in international markets rose 1.9% to $3,287.79, after an all-time high of $3,294.99 an ounce earlier in the meeting. U.S. gold futures surged 2% to $3,304.20. How does it fluctuate so quickly and what factors drive it?
International gold prices depend on many factors, including demand and supply, economic conditions, currency volatility and geopolitical events. It not only depends on market dynamics, but also geostrategic factors and political equations play an important role. Factors such as inflation, dollar strength and interest rates will also affect the price of gold.
Demand and Supply
Like any commodity, the basic principles of supply and demand determine the price of gold. When demand for gold exceeds supply, prices tend to rise, and vice versa.
interest rate
Compared with interest assets, gold prices fell as higher interest rates make gold less attractive as an investment vehicle. Similarly, when the price of gold rises, it rises. The same rules apply to shared market behavior. When the stock price rises, it makes gold less attractive and becomes cheaper.
Central Bank Policy
Gold reserve policies and the way the central bank (RBI) buys and sells may affect supply dynamics, thereby affecting gold prices. Buying more gold will drive prices up.
Economic uncertainty
As demand for gold rises, demand for metals increases with uncertainty in people buying yellow metals as hedges.
Geopolitical events
Major political events or conflicts like the Ukrainian war often lead to uncertainty and increase the demand for gold as a safe haven.
Global market trends
Since gold is a valuable metal, global traders and investors are closely watching its prices. Therefore, global market sentiment may have a significant impact on pricing. Emotional weakening can cause global prices to fall.
