Gold prices have been steadily increasing in the past few months. According to financial analysts, the value may even reach $2,000 per ounce in the future. If you are planning to invest in gold, then you must do it as soon here as possible because the price is slowly increasing and financial analysts predict that the price will not go down anytime soon. There are various reasons for the increase of the price of gold. Continue reading to find out the reason behind the rising in gold price.
Increasing Deficit in the Balance of Trade
The increase of deficit in the balance of trade to countries such as the United States is one of the reasons why gold prices are getting higher and higher. The deficit is caused by the increase of the proportion of the imports to private consumption (this also includes the volume of exports). The deficit in the balance of trade is a result of the rise in the imports’ ratio percentage by 1.4% and the rise in the percentage of exports by 0.4%. This deficit in the balance of trade is one of the causes of the rising price of gold.
Low Output of Gold
Another reason for the rising value of gold is the low output of gold from important gold-producing countries such as the Philippines, China, Australia, Canada, United States, and South Africa. The low output of gold from these countries is causing an increase in the demand of gold, resulting in the increase of gold prices in other countries.
Economic and Political Factors
According to experts, economic and political events all around the world also have an effect gold. In the Asian markets, gold rose by about 25% from 2010 to 2011 because of the fluctuations in the global oil market and the financial markets. The fluctuations affected the exchange rates of the currencies in many countries, prompting some of them to store large amounts of raw gold. This action is done in anticipation to political risks and security that is caused by the fluctuating global economy.
Increase in Demand of Gold
Lastly, the increase in gold prices is also caused by the increasing demand of gold. Today, the global demand for gold is steadily increasing while the supply of gold from gold-producing countries is decreasing. There is now a shortage in the supply of gold and this is causing the price of gold to rise. The increase in demand has caused the current price of gold to rise by 50% of its previous price a few years ago. According to experts, the high price and demand of crude oil is also affecting gold. The increase in the revenues of oil-producing countries is affecting the global market, which causing an increase in the price of gold in other countries.
These are just some of the reasons why gold will rise in the future. There are many other reasons that you can uncover with proper research.