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What Drives the Price of Gold Bars?

Gold is a fascinating commodity in today’s world.

It is used as a raw material to make jewelerry, knickknacks, and components in electronic and medical devices, but it is also used for investment purposes and traded in financial markets.

Gold bars, also called gold bullion, are a standardised measurement of gold that historically has helped people to measure quantity and record transactions.

To sell gold bars, make sure you use a reputable platform that understands the commodity and can offer high prices for high quality.

Let’s take a look at three factors that drive the price of gold bars.

Central Bank Reserves

Of course the price of this precious metal fluctuates, but broadly speaking it has risen considerably over the last 50 years.

This is in part because of the role of central banks, which hold both paper currencies and gold in reserve.

Over time, central banks have shifted their reserves away from paper currencies and towards gold.  This means that the demand for gold has increased, causing its price to also increase.

Today, many countries have reserves that are mostly made up of gold.

Value of USD

The value of the U.S. dollar also plays a large role in the price movements of gold.

Generally speaking, the relationship between the value of USD and the price of gold is inverse.

This means that (assuming nothing else changes) a stronger dollar will keep gold prices lower, while a weaker dollar will raise the price of gold by increasing its demand (because more gold can be bought when the dollar is weaker).

Even though the U.S. dollar is one of the most important reserve currencies in the world, when its value falls compared to other currencies, people often rush to buy gold as it is more secure.

This in turn raises the price of gold, helping to explain the inverse relationship we talked about.

Demand from Jewellery and Industry

It is easy to talk about gold just in relation to central banks and financial markets, but what about jewellery and other industries?

Well, it turns out that in 2019 jewellery accounted for around one half of the global demand for gold – or around 4,400 tonnes of the stuff!

Another 7.5% of this global demand is from technology and industry, which use gold for many different things like stents in medicine or GPS devices in electronics.  This demand keeps prices high.

We can’t ignore the simple effects of demand from consumers on the price of gold!

In Sum

There are many different things that have an impact on the price of gold, but the three points here are some of the most important.

Gold has been valued for all over the world for thousands of years.  It has a rich history and has played important roles in countless civilisations.

Keep up with the way the price of gold changes over time by focussing on these three factors and doing your research to discover more.

Good luck!

Author Bio:
Rajiv Sinha is a writer at
kemistri, a researcher, and a musician. When he isn’t reading or working, he can be found in one of London’s treasured parks.

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