The price of gold varies from day to day, sometimes changing drastically for various reasons. By understanding what affects the market value of gold and reviewing trends in the gold price history, you can more effectively determine when to sell and how much you can get.
Factors That Influence the Price of Gold
Just like any other commodity, the value of gold is subject to a variety of market influences. As these influences shift and change, the price of gold rises and falls accordingly. The following are just a few of the key factors in gold’s market value.
- The value of the dollar: Gold is an investment commodity that can be used to store one’s wealth. If the value of the dollar drops, people will rush to change their money into gold, increasing demand and price. As the dollar grows stronger, investment in gold is less common and the price drops.
- Inflation: Over time, the prices for things increase and the purchasing power of the dollar decreases. This is inflation. When the inflation rate is high, the price of gold increases. When inflation rates are low, the purchasing power of the dollar is stronger and the price of gold decreases.
- Supply and demand: This is one of the most central concepts in economics. As the consumer demand for gold increases and/or the supply of gold decreases, the price of gold goes up. If gold jewelry is trending or gold is needed for new technology, the price will rise with the added demand.
- Central bank diversification: Just like individual investors, banks can choose to diversify their portfolios by keeping different kinds of assets in reserve (U.S. dollars, euros, gold bullion, etc.). When central banks allocate more funds to gold, the gold spot price When they lean more toward the dollar or other assets, the price of gold decreases.
- Mining productivity: Gold is a naturally occurring element that can’t be artificially made in a laboratory. This means that it’s a limited resource, and the only way we can acquire gold is to mine it from the Earth. If mining productivity slows down, the available supply decreases, increasing the price of gold. As mining productivity ramps up, the supply grows and the price of gold decreases.
Reasons to Sell Now
Right now, gold prices are soaring toward historic heights. Whether you have previously invested in gold bullion or are looking to make some extra cash by selling unwanted gold jewelry or other items, this is the perfect time to sell for a high amount. The following are just a few of the reasons it’s a good time to sell.
- Relatively low inflation: Even though higher inflation typically leads to higher gold prices, it’s also important to compare the rate of inflation to the rate at which the gold price is increasing. As of 2020, the rise in gold prices is outpacing the rate of inflation. This means that gold is technically overvalued and it’s a smart time to sell!
- High prices: One of the primary rules of commodities trading is to buy low and sell high. In the case of gold, the current market price is close to its highest point on the gold chart in a century! It doesn’t get much better than that, making this a perfect time to get lots of cash for your gold.
- Uncertain economy: With the global coronavirus pandemic and other issues facing the nation, the economy has become significantly less stable. Because gold is an investment commodity, its value increases as the economy’s stability weakens. The current uncertainty bodes very well for anyone looking to sell.
- Investor enthusiasm: Because the economy is so unstable, people are rushing to move their money into traditional investments like gold. When things began to decline in 2020, sellers found themselves quickly selling out of gold coins and bullion. This intense enthusiasm on the part of investors means great demand and great prices for gold sales.
- Immediate funds: Whether you’re experiencing financial difficulties or simply need additional cash right away, selling your gold can provide an immediate influx of funds. This is especially helpful right now, when many Americans are facing their own uncertainty with regard to income and assets.