From 2009 to 2011, gold spot prices more than doubled. The gold price serves as a good economic indicator, because an increasing gold price signals weakness in the economy as investors start investing in gold. The years after the Great Recession, which occurred from 2007 to 2009, demonstrated this fact. In mid-2013 the economy stabilized and prices began to drop. Two consumer markets have emerged recently that have affected all industries: India and China, which are the two most populated countries in the world. Demand for gold typically climbs when interest rates are low. Also, gold acts as a safe haven for investors when returns from bonds and cash savings are poor.
During times of national crisis, such as a war or a serious natural disaster, the price of gold tends to greatly increase. People start to fear that their paper currency may no longer hold value, but they see gold as a stable asset that can always be used to purchase other goods. Another common factor influencing rising gold prices is the success of the real estate market. When there are low or negative returns on real estate, the demand for gold and other commodities typically is expected to increase (Clark 2017). Bank failures can also contribute to an increase in the price of gold. The best example of this occurred during the Great Depression, when rising gold prices due to bank failures led President Roosevelt to ban the holding of gold by private citizens.
Gold prices are influenced by the value of the US dollar, The price of gold and the strength of the dollar have a pretty clear inverse relationship; when the dollar is strong, gold is weaker, and vice versa (Sepanek 2014). Over half of gold demand is from jewelry, and China, India, and the United States are three countries with the biggest demands. In some parts of India, gold is still regarded as a type of currency, a display of wealth, an important gift, and a hedge against bad times. This demand drives the price of gold in India up. Also, a booming Chinese economy means that more people have money to spend on gold in China.
Currently, the price of gold per ounce:
