Factors Affecting Gold and Silver Prices in the Current Market Dynamics

Gold and silver have been trusted precious metals in which people have invested for years. However, with the pandemic raging, the market dynamics have undergone some changes. They are some of the most complicated assets to set a price on, yet they are still the safest form of investment. 

The pricing of precious metals is based on the valuation of other assets, and so there is some difference in the pricing in the US compared to the rest of the world. Nevertheless, considering sites like Gold Bullion Australia is still an excellent form of investment if you are looking for the safest avenue of securing your money. Here are still some primary factors that determine the price of precious metals. 

  • Global Growth and Development 

The price of gold and silver is often dependent on some other markers of growth in the world. The global Brent Oil benchmark is considered a standard. Recently, the slow global growth due to the pandemic had weakened the Brent a little, which is why the gold price has gone down. However, they are expected to recover soon. 

  • Inflation

Inflation can have a direct impact on the price of gold and silver. In some countries, the higher prices of essential commodities strongly influence gold and silver than other developed nations. However, the inflation fell after 2008, and the prices of gold and silver stabilised a lot, making it an excellent avenue for investment. 

With many commodities falling during the pandemic, this is a great time to invest in gold. However, when the demand for gold and silver increases, the prices increase too. Countries like India and China buy much gold for private use, affecting the price accordingly during the festive and wedding seasons. 

  • Activities of the Central Banks

The central banks in almost all countries publish data about how the economy is doing and based on them, you can see specific changes in gold, silver, and platinum prices. The central banks of emerging markets earlier relied on US treasury reports. Many central banks are now moving towards inflation-resistant reserves. 

The IMF once had strict rules about not buying gold anymore, something that quite a few European countries also complied with. At present, with a global crisis at the door, many investors are turning to buy precious metals as many stock markets around the world have become volatile and unpredictable. However, purchase your bullion from a trusted platform like Gold Bullion Australia to get the best value. 

  • Interest Rates

The US market is still one of the major drivers when it comes to financial markets. When the US treasuries become more attractive, the prices of precious metals fall. So when the real interest rates are high, the gold price goes down. This is when you should buy gold bullion. When the interest rates fall and the gold price starts climbing, you may start selling to get returns on your investment. 

The prices of gold and silver might still vary from country to country, but no matter which part of the globe you travel to, you will always be able to liquidate it for cash. This is what makes them such trustworthy methods of investment even during periods of global crisis. 

Posted in: Personal Finance

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