Gold is one of the precious and reliable metals available in the world. Gold is even traded in stock markets, which makes it an important commodity in the trading sector. Gold trading has been in existence since a long time, it’s not anything new. Central banks around the world have reserves of gold to sustain emergency crisis. The price or demand for gold depends on various factors like demand and supply, struggling markets, currency devaluation, central banks decisions, etc.
Let's see a few of the reasons here.
Demand and supply
The prices of gold majorly depend on demand and supply. Generally, the prices of gold increase when consumption is more and vice-versa.
When shares in the stock market fall consistently then people start investing in tangible assets like gold, which in turn increases the price of gold.
Whenever the value of currency decreases in comparison with other currencies, investors across the world prefer to purchase gold. Especially, the US dollar value shows a huge impact on the prices of gold. Strong dollar value leads to a fall in the prices of gold.
Central banks hold large reserves of gold, so they trade gold considering the economic conditions of the country. At times, the central banks impose a restriction on exports and imports of gold to curb inflation.
All these factors are major reasons that decide the prices of gold.