Why The Price of Gold Changes

There are many factors that result in the constant market price fluctuation of Gold. One of which is simply the value of the dollar. The price of gold appears to change when adjusted for the movement of the dollars value, but it really is not a factor. It is merely an adjustment of the dollars value and not the value of gold. The price of gold changes that occur are caused by variences in supply and demand.

If a new Gold deposit is discovered or a large amount of gold is offered for sale by a Central Bank, then the supply of gold increases. If it is not quickly bought up and sits on the market, then the price of gold will fall until it is purchased. This happens every day in the gold market, If many people sell gold at the same tiem, a "sell off" occurs and the price generally falls.

It is the exact opposite when demand increases or supply is limited. Prices rise when large volumes of gold are purchased or when the supply of gold is scarce. Gold is considered a finite resource and only so much of it is in existence, with a percentage of that being able to be mined and brought into the marketplace for consumption.

Right now, the demand for gold has reached new highs, causing the price to increase to new high levels. While the gold market is currently enjoying record high dollar per ounce prices, if you adjust those prices for inflation or the CPI Index, then prices still have not reached the high levels of 1980. We are only a little better than halfway there. Quite honestly, one would reasonably assume that gold prices should head much higher than 1980, given the demand levels exceed that period and the economy has really been far worse off, especially on a global scale, then in any other period in history.

Conceivably, Gold can reach levels beyond $2500 US Dollars so keep an eye on this very dynamic and exciting market. I would pay careful attention to other precious metals. Silver may have more growth potential right now than Gold and do not count out Palladium and Platinum and other rare earth metals as the global demand for metals rises as other economies and countries develop new technologies dependant on these metals in the production of new goods and services.