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6 Factors that Impact the Price of Gold

One of the most common questions we get asked by our customers is “What actually affects the price of gold?” You see, we pay our customers for their gold based on its minute-to-minute value – just check out the real-time value of gold, and other precious metals, on this website. We will always pay you more for your gold than the competition, but it’s all based on gold’s current value when you walk in our doors.

Here are the 6 factors that can impact the price of gold:

Price of Gold versus Stock Market

Until recently, it has been true that when the stock market goes down, gold goes up. But changes in the behaviors of investors have caused a shift in this. Today, when the stock market goes down, the price of gold will often inch lower too – because investors will sell their stake in gold to make up for losses in the stock market. Because gold is at an all-time high, these investors are relying more on gold to short their losses.

January’s Budget Brinkmanship

Known around political circles as our fiscal cliff, January 1 is the date when Congress is expected to approve a new federal budget. If nothing is done, we’ll see tax rates go up, and spending on government programs get slashed across the board.

But relative to gold, the inability for Congress to agree on a budget could send the cost of gold sky high! The public will be fiscally scared, and start moving money to more conservative vehicles – and that means gold. It’s very likely that as we get closer to this deadline, gold will inch higher as people try to hedge their investments. If Congress does come to an agreement, expect to see gold prices go down as people see that they don’t need to hedge their bets anymore.

Israel, Iran and United States

The world has been clear about the threat of a nuclear Iran. If that threat continues to push the nerves
of Israel and the United States, leading to a final resolution that would include an attack on Iran, expect gold prices to move up. People will be afraid of an uncertain future that includes another war, and the United States would have a hard time paying for it. But unlike our fiscal cliff, inaction or Iran’s decision to comply with the United Nations would not have a negative effect on the price of gold.

Oil is Gold’s Friend

Price of oil goes up…price of gold goes up. Price of oil goes down…price of gold goes down. These two are joined at the hip like a couple of school girls. During uncertain times, investors and nations both tend to stockpile oil (for energy) and gold (for money).

Watch What Happens With Europe’s Money

The prices of gold and silver are measured in dollars around the world. When our dollar is worth less, it takes more dollars to buy an ounce of gold. That makes the price go up. Usually, a spike in the value of the Euro brings down the dollar, which makes gold go up.

The Bernanke Factor

Ben Bernanke is a whiz at public relations. His words are golden, his insights are respected, and when he speaks the markets move. So when he says things that indicate we will experience inflation or deflation, watch what happens to gold. Inflation makes gold go up. Deflation makes it go down. It’s all about the value of the dollar, an inverse relationship with gold.

What Should You Do?

The truth is, predicting the rise and fall of gold is the same as predicting the stock market. It’s impossible to know which way the wind will blow at any given time. But what is true is that gold has hovered around its highest levels in generations. So gaining a point or losing a point here or there shouldn’t cripple you from action.

The point is this…if you have gold jewelry now that is sitting in a dresser drawer unworn in years, then bring it in now! You’re going to get more cash than ever for your wallet to buy something you really want.