Why Gold Price Is Rising: Factors Leading To Rise in Gold Prices

Why Gold Price Is Rising

The skyrocketing price of gold has left investors baffled. The question doing the rounds in the market, is would the price keep soaring. If recent developments are any indicator, then one needs to be prepared for further rise in the price. The rise in price of gold is directly linked to some irreversible economic decisions. Factors leading to the rise in gold prices are discussed below:

Rise In Money Supply

To boost the economy, most recession hit countries have either pumped more money in the economy as stimulus or have resorted to quantitative easing. This has led to the sudden rise in money in supply thereby leading to fall in confidence in paper money. So, gold prices have shot up. If governments continue pushing doses of stimulus package, gold prices are likely to soar.

Unpredictable Stock Markets

The stock markets have behaved in the most volatile manner, in recent years. This has caused investors to look for safe havens. Gold is one of the safest forms of investments. With an investor rush to buy gold, the price of gold has shot up considerably.

Fall In Gold Production

Cuts in gold exploration around the world have led to a fall in production of gold. With gold in short supply, and rise in demand the price is bound to shoot up.

US Credit Crisis

The US credit crisis has led to cut in interest rates by the Fed. This has caused the dollar to become weak. With a weakening of dollar, the price of gold has shot up. Unless the dollar begins to gain in strength, prices of gold will keep increasing. As none of these factors are likely to ease out in the near future, the price of gold will continue to soar.

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