The most critical factors controlling gold prices

Supply and demand affect gold prices like any other commodity—increased demand and reduced supply lead to higher prices, and vice versa. Higher supply and lower demand lead to lower prices.

It should be noted here that gold mining is becoming increasingly complex over time, which is one reason for the constant rise in its long-term prices.

The most critical factors controlling gold prices

Inflation, interest rates, and currencies
Government decisions in this regard affect prices. Low-interest rates and high inflation lead to higher gold prices.

The same applies to exchange rates, and if the local currency is weak, there is an increase in gold prices.

Geopolitics fluctuations
Political instability, conflicts, and terrorist threats may increase gold prices. Measuring how such matters affect gold prices compared to previous factors is challenging and varies from case to case.

Many economists have linked the recent rise in gold prices to the Russian invasion of Ukraine. Many investors have begun to refrain from buying risky assets and have proceeded to purchase gold alloys (the prices of which, according to Reuters, increased by more than 12 percent this year), as they are considered safe investments in times of geopolitical volatility and high inflation.

The well-known Irish writer George Bernard Shaw, in his book “The Guide of Smart Women to Socialism and Capitalism,” said, “You have to choose…Between confidence in the natural stability of gold, the natural stability of the secretariat, and the intelligence of government members. Given the current capitalist system, I suggest voting for gold despite these gentlemen’s opinions.

The old relationship between gold and the dollar continues to affect markets. It is common knowledge that this relationship is counterproductive. A rise in the dollar means a fall in gold, and vice versa.