The phenomenon of high gold prices, whether in the local or global market, has many reasons and factors that led to its occurrence, the main factor is recession, which leads to many investors heading to invest in the gold market and use it as a safe haven to preserve On the value of their savings in light of the instability of the economy. Besides, the devaluation of the US dollar also caused investors to invest in gold. When reviewing global gold price indicators, we find that prices have exceeded
Governments sometimes also invest in gold to maintain their own reserves, as India did in the year 2017 When she purchased 09 Tons of gold, which caused a global surge in price. This is due to the government’s lack of confidence in the stability of the dollar’s value and its depreciation as a result of raising the interest rate on US bonds and increasing the rate of inflation.
The demand for gold was not limited to the state of India only, but also included many other countries such as China and Russia so that their dependence was not entirely on the dollar. Investors also tended to invest in other precious metals in addition to oil as well.
Despite this, the future of gold prices can only be determined based on the factors mentioned at the present time. It is preferable to invest in gold over long periods of at least several years, or to speculate daily with it. Therefore, the demand for it increases there, as well as the demand for gold in many Arab countries such as Saudi Arabia, Kuwait, Bahrain and the Emirates because of its necessity in completing the marriage ceremonies and the increasing demand for it by women.
Also, adding a new currency to the basket of global currencies usually leads to the attraction of investors to invest in it, and the relatively low prices of gold in return.
Wars, bad economic conditions and crises lead to a significant increase in gold prices.
Increase in demand rate
Many people want to invest in Gold when the rate of instability is high and future conditions are unpredictable, which leads to a rise in its prices in light of a recession or not.
Gold and the rate of inflation
The higher the inflation rate, the lower the value of the currency, and therefore many people buy gold to use it as a substitute for the currency, which leads to a rise in gold prices in those circumstances.
Gold and the interest rate
In normal economic conditions, there is an inverse relationship between gold and the interest rate. A regular security return and consequently a decrease in the demand for gold and a decline in its prices, while in the event the government goes to reduce interest rates, there will be an increase in the demand for gold as an alternative and thus its prices will rise.
The local seasons in countries such as the Eid season after Ramadan in Saudi Arabia, the Emirates and the Arab countries affect the increase in demand for gold and consequently the increase in its prices.
Partial investment in gold, in addition to bonds, stocks and other securities, helps in protecting against being affected by a decline in the stock market, whether global or local. If an economic collapse occurs, investing in gold will help to avoid large investment losses because its prices will rise in return. Political conditions
as The North Korean nuclear missile crisis, which led to a rise in gold prices, conditions such as wars, disasters and political crises lead to a rise in its prices.
The dollar’s depreciation In normal conditions, a decline in the value of the dollar leads to an increase in gold prices. As the value of the dollar falls, the value of other currencies rises, increasing demand for things such as gold.
Gold Demand in the Future According to some measures, worldwide demand for gold is larger in 2017 tonnes than what is mined each year. Because of the shift in gold mining rates, as well as the fact that the majority of gold used in the jewellery business is reformed gold, it is projected that the supply of gold would drop and the demand for it will grow, resulting in a rise in gold prices.