The main factors affecting the price of gold in 2021
Despite the fact that gold is considered one of the most reliable assets, its price does not remain constant. Annually analysts record fluctuations in rates, of course, not as impressive as in various currencies or cryptocurrencies, but also noticeable. Let's talk about what affects the price of gold today, when it is 2021. We've been going over the main benefits of buying gold bars. And now let's look at the factors which should be considered in the modern realities of buying gold.
- Macroeconomic risks. Last year was marked by the coronavirus pandemic, which brought a huge economic downturn on a global scale. But for gold and its sellers it was profitable, because historically the price of gold goes up in the years of wars, crises and pandemics.
- Attention from the Central Banks. Indeed, after a brief drop in 2020, when central banks froze in anticipation of developments in the world and reduced the purchase of gold to a record 363 tons, in 2021 recorded an increase in purchases by state banks around the world. In Ghana, Croatia, this growth has already peaked. Thus the higher demand dictates the higher prices.
- The U.S. dollar rate is still affecting the price of gold. This means that fluctuations in the monthly and quarterly charts will be entirely dependent on fluctuations in the U.S. dollar rate.
- The volume of the yellow metal's production. The less it is mined, the more expensive it becomes. Incidentally, this has been one of the key factors driving up the price of gold in the past 5 years. Accordingly, the largest deposits are annually reducing gold mining, which means that the supply of the metal is also reduced, while the demand for it in the economy and industry is sustained or even growing.
- It is also worth considering the factor of demand for industrial purposes and jewelry. If you look at the segmentation of the market, the jewelry industry accounts for more than half of all gold sales. The industry accounts for 8%, which is also quite significant. Last year, because of the lockdown demand for gold for industry and jewelry was down, businesses were idle and there was no point in buying gold jewelry - there was simply no place for it to appear in the conditions of the lockdown. But 2021 was a year of catching up on lost opportunities, and demand went up sharply. Which also affected the price of gold.
If you summarize all of these facts, it is clear that people see gold as some sort of support in times of instability. Whenever the world goes through a crisis, the price of gold increases. The year 2021 clearly demonstrates a continuation of this trend set in 2020. Also, central bank and industry demand is up this year compared to last. And that also supported the growth in the price of the precious metal. And the seasonal price fluctuations are best explained by the gold price correlation with the U.S. dollar exchange rate.
In general, gold is now on the rise of its popularity and demand. The upward price trend persists, which means that investing in gold is profitable. Don't miss your chance to invest in the precious metal and earn more in the future! And Golden Way will help you not only buy gold bars on the most favorable conditions, but also develop an investment strategy that in the future will help you earn differently!