What is the impact of the supply and demand situation on the price of gold?

2023-06-05
Summary:

The price of gold is directly impact by the supply and demand situation in the market. Learn how these fluctuations can affect the gold market.

Gold is an international asset, so there are various factors that affect the price of gold, such as supply and demand, the US dollar exchange rate, geopolitics, economic situation, and so on. The following questions are to be answered about the impact of supply and demand on gold prices.

What is the impact of the supply and demand situation on the price of gold?

The impact of supply and demand on gold prices:

1. In economics, the balance between supply and demand is often an important factor in determining the level of prices. In the investment market, changes in supply and demand are also important factors determining the price of investment tools. Therefore, the fluctuation of gold prices is based on the relationship between supply and demand. Generally, when there is a significant increase in gold products and the market supply exceeds demand, the gold price will fall back. When the production of gold products decreases and the market supply exceeds demand, the gold price will rise.


The impact of supply and demand on gold prices

2. As a major global gold consumer, India's gold consumption demand will have an impact on gold prices. Indian consumers will view gold as high-end jewelry and stored value investment products. However, due to the lack of gold mines in India, gold demand relies on imports. When the Indian holiday season and wedding season arrive, the demand for gold consumption skyrocket, and the import volume of gold is large, supporting the rise of gold prices.


3. China is also one of the major global gold consuming countries, and the repeated stimulation of the epidemic has stimulated gold consumption demand. The World Gold Association stated that the impact of the epidemic on China's gold demand still exists. In general, when the demand for gold consumption in China increases, the price of gold will also rise.


In summary, in recent years, the proportion of gold investment demand in the market has been increasing, and the impact on gold has become more elastic and sensitive. Therefore, every move in the financial derivatives market is more important for the trend of gold prices. However, the supply-demand relationship is not the only factor that affects gold prices. Therefore, when investors judge the trend of gold prices, they also need to integrate other fundamental factors and technical information to improve their judgment accuracy.


【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

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