Across the world gold price has show high fluctuations recently. The big gold boom was first halted, then reversed and is now slowly going up to the higher range. The price of gold is affected by many national and international factors.
- Tax and Import Duties: Because there are only a handful of nations which produce any significant gold, most of the nations import gold. The import duties and tax rate changes on gold can directly affect gold price.
- Central Bank Reserves: Most of the countries including US and European countries has gold as reserve for the paper currencies in circulation. The recent increase and decrease of demand of gold by these central banks have greatly affected the gold prices.
- Gold Demand: Countries like India, China and US are main consumers of gold, mostly as jewelry. The festival seasons, economic growth and investment preferences of these countries greatly affect gold price.
- US Dollar Value: Internationally gold price is noted in USD and gold tend to show a inverse relationship to USD. So when the dollar gets strong, the gold price decreases and when the dollar gets weaker, then the gold price increases.
- Gold Production: Although many new large scale gold mines became operational in recent years, the gold production is getting stagnant or low because of fast exploring of easy reserves. Now most of the gold are mined from very deep mines and the production cost is very high.
- Investment and Wealth Protection: Most cultures and investors consider gold as a safe investment which can also be used to hedge against inflation, deflation, economic recession and currency devaluation.