“Change is all that is constant in the world” – This popular saying is still relevant today. No matter how much we try to keep things stable the universe will always find ways around it. There is no way to keep things the same in this world, particularly commodities. What is valuable today may be worthless tomorrow. Although gold rates today has managed to retain its status as an important metal over the centuries, even this mighty treasure is susceptible to change.
Fluctuating gold rates today are a global trend that changes almost daily. Extremes are not uncommon when it comes to gold prices. These extremes can evoke a wide range of emotions from joy and happiness to sadness and despair. The last few months have seen gold rates go on an emotional rollercoaster, with highs and lows that fell to dangerous depths.
We often wonder why gold prices fluctuate. After all, gold has been around for centuries. It has remained a constant throughout history. Why shouldn’t gold be immune from fluctuations and other lowly factors? It’s not. Gold is like any commodity and its price is unpredictable.
Why do gold rates today fluctuate? These are just a few reasons why gold rates fluctuate.
Gold Rates Today and Central Bank Actions
Gold is perhaps the most stable investment (in terms of survival), which is why every country has a gold reserve, managed by the central bank of such country. The gold rate can be affected by central banks’ decisions regarding their gold reserves. China’s decision not to sell some of its gold reserves on the market led to a dramatic drop in gold prices. Other central banks may take similar actions that can cause gold rates fluctuate just like the weather in an ocean forest.
The impact of government policies on gold rates can be either direct or indirect. Global gold rates can also be affected by the policies of economic giants. An example: A US Government decision to reduce interest rates could cause a dramatic change in global gold prices, sending rates plummeting even though it was only a thought. Similar actions can impact gold rates on all continents by major gold producers.
Demand and supply
Our economic environment is dependent on supply and demand. Because gold is a natural resource, it is only available in a handful of places. Also, its production is very limited. Although there is a large demand from all corners of the globe for gold, limited supply means that gold rates are a game of hide and seek. China’s recent decision of offloading gold to global markets has led to a surge in demand and a surplus supply, which has pushed down gold rates.
Trends in Investment
Although gold has been considered the most secure investment option, people are now exploring other options. Investors have turned away from gold because it does not provide high returns and has a low return rate. This has led to fluctuations in demand and supply which, in turn, affects prices. Gold prices can fluctuate weekly due to changing investment needs.
Changes in currency
The most widely traded currency for gold trades is the US Dollar. Changes in these currencies can have an impact on how international gold rates trade, pushing up or burying prices. The strength of the US Dollar has historically influenced gold rates. Prices rise when the dollar weakens and vice versa. Even though they might not be obvious, changes in other currencies can also have an effect on gold rates.
Gold rates today can fluctuate due to international relations. Gold is often referred to as the “crisis” metal because it can maintain its value even in times of war or geo-political crises. Prices could rise if there are poor international relations between producers of gold and other important countries, while good relations could help to lower them.