Today we will talk about many factors that affect the price of gold.

We know that gold has three very important attributes, one is monetary attribute, one is commodity attribute, and the other is financial attribute, so the factors that affect the price of gold will be very complex.

It can be said that the change of gold price is related to the trend of all kinds of markets, and it is the result of the joint action of various forces, various countries and all kinds of important things, and it is a process of market comprehensive game. Because it involves core financial resources, as well as the pricing influence of the market, including foreign exchange reserves. More seriously, it involves the diplomatic influence of many governments, and so on.

The most important influencing factors, we are divided into five categories.

The first one is the relationship between supply and demand. Whenever there are more people asking for the price of all kinds of products, that is, the demand increases, the price will rise when the supply exceeds the demand. This is a natural law, determined by the market, and the price will be reduced when the supply exceeds the demand. Therefore, the most basic fluctuation of gold price is still the principle of supply and demand.

If the output of gold increases and the recycled gold buys back this part of the gold, the amount sold to the market will increase, and the price of gold will continue to fall. But the amount of gold mined, as well as the amount of gold it regenerates, is difficult to increase at once, and gold is not radish cabbage. If you want to increase the output at once, the whole production cycle of gold is actually very long. The use of new technologies and the improvement of overall production capacity will take decades to have a certain effect, so for decades, no matter how hard countries try, the growth rate of gold supply has rarely exceeded 5%.

Well, China has the fastest growth rate, and is now the largest gold producer, but the current output growth rate has been negative, declining for two consecutive years. If only in terms of commodity attributes, its influencing factors are also very direct. For example, big gold consumers such as China, Saudi Arabia and India, if it comes to the peak consumption season, such as the wedding season in India, golden holidays in China, some religious festivals in Saudi Arabia, and so on, will lead to a great increase in the physical demand for gold.

But for example, in order to prevent the loss of foreign exchange reserves, India often raises import tariffs on gold, which will control its domestic demand, so tax policy will also affect the supply and demand of gold.

Since the opening of the gold market in 2002 and the establishment of the Shanghai Gold Exchange, China has become the world's largest consumer of gold from a country with an annual consumption of less than 100 tons. In fact, the continued increase in gold demand in the Chinese market is also the result of policy deregulation, so focus on supply and demand. Of course, your focus is not only on data, but on being able to predict what kind of potential and policy risks which country will have. Especially in the big consumer countries, what kind of policies will affect the entire consumption and production of gold? for example, with the strengthening of China's environmental protection policies in recent years, it has affected the output of China's gold mining areas.

OK, the second factor is that we have to pay attention to the trend of the US dollar, because the US dollar is a very important factor affecting the fluctuation of gold prices. If the dollar continues to be strong, or if the dollar is very attractive, then gold, as a non-credit asset, is denominated in dollars and has a seesaw effect.

Historical data also show that more than 95% of the trend between gold and the dollar is negatively correlated. In this case, that is to say, the sustained rise of the US dollar will also exert a pressure on the price of gold, and the continued decline of the US dollar will contribute to the outbreak of gold price. For example, between 2001 and 2008, due to the continuous decline of the US dollar, the price of gold also continued to rise more than threefold.

The third factor is called geopolitics.

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Because gold, as a decentralized asset that has a strong consensus and transcends countries and political regions, in many cases, geopolitics has a greater impact on it. When people encounter risks, they naturally think of gold. For example, you have a saying called "gold in troubled times, antiques in prosperous times". That's what it means.

That is to say, if there are geopolitical fluctuations, gold is actually very useful. Another saying is "ten thousand taels of gold at the sound of a cannon." Risky events such as war also have a great impact on the price of gold. For example, the 9 / 11 war in Afghanistan, the war in Iraq, and the subsequent war in Libya actually had an obvious boost to the price of gold. But a lot of geopolitics are hard to predict, so we have to hold gold in advance so that it only works when there is a risk. If you wait until the risk arises before buying it, then often its risk aversion has been released in the market, and the cost of buying it is already very high.

The fourth factor is called inflation. Gold is the only uncreditworthy currency in the world, but we can also refer to crude oil, silver and some commodities as uncreditworthy assets, but it is difficult to fully link them to currencies. Because if gold is seen all over the world, it is also a payment currency that everyone is willing to accept.

Historically, as a lasting monetary form, gold is actually a kind of natural monetary consciousness from the bottom up when people have no belief in the social credit system. For thousands of years, no country has successfully designed a currency that can last for hundreds of years. The dollar actually decoupled from gold in 1971 and has depreciated by more than 90% relative to gold in less than 50 years. When money liquidity is flooded and inflation occurs, gold is favored by investors because of its anti-inflation function, which will lead to a rise in gold price.

In fact, gold has historically been very stable in maintaining its purchasing power. Let's take the famous tailor street suit in Britain as an example. for hundreds of years, the price of a suit has been around five or six ounces of gold, which is proof that the purchasing power of gold has not changed for a long time. How much did each suit cost hundreds of years ago, only a dozen pounds, but now the price can only buy one sleeve? what does that mean? It shows that gold's fight against inflation has been proved.

What is the fifth factor affecting the price of gold? It's the price of the commodities associated with it. For example, the price of crude oil, silver, platinum, Ba Jin, and even copper in the international market, its trend fluctuations will affect the price of gold.

In fact, the reason is very simple, because commodities themselves are more or less investment, and they are all denominated in US dollars. once commodity prices begin to rise, they will attract funds from other markets, and gold will passively absorb some of the funds. When commodity prices continue to fall, it shows that deflation is coming, gold will become less attractive, so on the whole, there are many factors that affect the price of gold.

You have to put it in a very complex context, and you have to look at the overall situation. Why is it interesting to study gold? It is because gold is not simply a variety. Unlike the Chinese stock market, where you can speculate when you hear the news, gold is a tool that carries the most advanced information in the world. There are indeed a lot of things to pay attention to in investing in gold, so after investing in gold, you will find that your horizons are opened, which is of great help to upgrade all kinds of cognition and to your growth.