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Contrary to common beliefs gold prices move up
and down just like any other commodity. Since Gold can act as an inflation
hedge and a safe escapement during times of economic uncertainties and
slowdowns it’s crucial to understand the factors affecting gold prices so that
you don’t take wrong investing decisions.
Gold Prices and the US dollar
Gold is quotes in US dollar, this means that
those buying and selling Gold must do it in US dollar and therefore when the US
dollar goes up it means that buying dollar has became more expensive and this
in turn makes buying gold more expensive. That’s why gold goes down when the US
dollar goes up and vice versa.
Gold prices and Oil
When Oil goes up the global economy slows down
which threatens corporate profits and makes gold a higher yielding investment.
Thus when Oil goes up gold prices go up and vice versa.