Gold Prices in the USA
Gold has been a form of currency around the world for thousands of years. The first known gold coins were found in Asia Minor and were said to have been made around 600 B.C. Gold is a highly sought after metal that has many applications including jewelry, investments, and manufacturing.
Gold prices fluctuate daily just like any other investment and there are many tools that can be used to track gold prices.
What affects the price of gold?
If you are a potential investor in gold or have an active investment in gold, you need to be aware of the factors that affect the price of gold. Unlike stocks and other paper backed investments, gold does not have earnings, profits, shareholders, or executive salaries. As a potential investor, you need to know what the major factors that affect the price of gold:
Central Bank Reserves/Instability – Central banks for various countries are constantly buying and selling gold. The US Federal Reserve acts as a custodian for the US Department of the Treasury and the Treasury owns about 261 million troy ounces of gold as of May 31, 2017. The buying and selling of gold by central banks is a factor that affects its price (supply and demand).
Gold Production/Mining – Gold mining and production has become increasingly difficult, as there is a finite amount of the metal on this planet. You can no longer go panning for gold in a river and expect to find any amount of gold. Because the process of mining and producing gold has become increasingly difficult, miners and producers sell their gold at higher prices.
Volatility Indexes – Volatility Index, CBOE Volatility Index, or the VIX commonly referred to as the fear index. When consumer confidence is at a low, the VIX goes up. Many studies have shown that when the VIX increases, this is often a sign that the price of gold will increase shortly.
Jewelry Production Demand – Other than a store of wealth, gold is widely used in jewelry and accounts for the highest percentage of global demand. With global populations increasing and a finite supply of gold, demand will not slow down any time soon.
Interest Rates – The price of gold tends to reflect inversely to interest rates. As interest rates decrease, the price of gold tends to increase and when interest rates are high, gold prices tend to decrease. So when the Federal Reserve announces increases or decreases to the Federal Interest rate, this can have an impact on the price of gold.
Inflation – Since the United States went off The Gold Standard, the dollar has become weaker and weaker as the Federal Reserve prints more cash and rising costs of living means that the paper in your wallet buys less and less every year. From 2000 to present, Gasoline costs are up 75%, ground beef prices are up 175% while the price of gold is up 310%. The buying power of gold continues to remain steady while the buying power of cash continues to decrease.
ETF Trading – Gold ETFs are paper backed securities that buy and trade gold based on demand. The active trading of gold in ETFs has a small impact on gold prices based on supply and demand.
Geopolitical Factors – War, rising tensions, global incidents have often shown to have an impact on gold. After 9/11, the price of gold in the London market rose 33% in one day. When there is uncertainty in the air surrounding military conflicts, terrorist attacks, political controversies (impeachments), etc., people tend to flock to gold.
Value of US Dollar – Since the United States went off the Gold Standard, the buying power of the US dollar has decreased. Inflation has caused the cost of living to increase, and the decreasing buying power of the US Dollar leads to increases in gold.
Tracking the Price of Gold in USA
There are two ways to track the price of gold. Checking the spot price is the easiest. The spot price of gold is the cost of an ounce of new gold, and may not reflect the full value of your gold holdings, but will tell you if the value of gold is rising or falling.. The other way to track gold prices is by looking at gold futures. Gold futures are the spot price of gold for a date in the future. This is the most common way of tracking the trend of gold.
This is the most common way of tracking the price of gold.
Spot pricing of gold can be found easily by looking at our pricing charts. The price of gold is affected by many different factors so the pricing changes constantly.
- The price of gold can change from second to second.
- The price and value of gold are determined by supply and demand, world conflicts, and the overall global economy.