First: supply and demand are the main factor affecting gold prices
- Like other financial instruments listed for trading in the financial markets, the price of gold is mainly affected by the quantities of supply and demand, for this reason it is very important to follow the news in this regard. For example, when talking about discovering a new gold mine that contains large quantities of it, this means an increase in supply, which will result in a decrease in gold prices. But on the contrary, in the event that certain problems occur, such as explosions or collapses in gold mining mines, this means that the quantity supplied will decrease compared to the amount of demand, which leads to an increase in the prices of gold. Therefore, the trader must be aware of all relevant information, in order to be able to accurately predict prices and thus enter into successful deals.
Second: The US dollar is one of the most important factors affecting gold prices
- The price of an ounce of gold is evaluated in the currency of the US dollar, and its circulation over the Internet is similar to currency pairs, on one end of which is gold and on the other side the US dollar, so we find that in many times, the change in the price of gold is caused by the US dollar, so that sometimes the US Federal Reserve their financial policy decisions, setting specific targets for gold prices, and trying to regulate this issue by regulating the relationship between the price of gold and the price of the US dollar.
- In general, it can be said that there is an inverse relationship between the price of the dollar and the value of gold, and this relationship is already more than 90% of the time correct, as the increase in the value of the US dollar is one of the reasons for the decline in gold prices and vice versa. For this reason, all those wishing to trade in gold over the Internet should follow the changes in the value of the US dollar because it will definitely leave an impact on the value of gold.
Third: political factors
- Gold prices are clearly and largely affected by the political factors, as we find that its value rises significantly in times of wars and tensions as a safe haven for investors. Among the clear evidence of this is what was happening every time North Korea conducted new missile tests. In these times, gold prices were flying high and achieving new levels. Quite the opposite, where gold prices fall in times of calm and stability at the global level. The Political Economy Department of the Trading School deals with the relationship between economics and politics and its potential impacts on the economy of countries and financial markets.