Analyze what causes the gold price to go up and down

Anyone who tries to keep track of the price of gold will notice that the price of gold will always rise and fall daily. For example, on April 1, 2024, a report from the Hua Seng Heng website revealed that domestic gold bar prices have risen sharply. Last week, it reached a new high of THB 38,550, which increased by 14.56% from the beginning of the year.

Today’s gold price on April 2, 2024, has increased by 100 baht, and the price of gold bars is 39,000 baht per baht.

Have you ever wondered what causes gold prices to rise and fall daily? Today, ACU PAY will solve the question of the factors that cause gold prices to go up and down.

What factors cause the gold price to go up and down

Gold is considered a Safe Haven asset that can insure against all risks on Earth and maintain its long-term value. 5 main factors affect gold prices:

1. The state's monetary policy and interest rates

The first factor is monetary policy and interest rates which have to do with gold prices going up or down. If interest rates rise, this reflects a good economy, gold prices will fall. On the other hand, if the economy is not good and confidence in the country is low, gold prices will rise because people will hedge against other asset investment risks and invest in safe assets like gold.

For example, the latest gold price hike is supported by the Federal Reserve’s interest rate cut, which is expected to begin in June for the first time, which may cause issues from the new U.S. presidential election to be involved.

2. Fuel prices and inflation

Fuel is a highly sought-after commodity in the world market. If fuel becomes expensive, it will cause inflation, making the gold prices rise as well. In addition, from previous statistics, it was found that if the inflation rate rose, the gold prices would also increase. Gold is considered an asset that would be a hedge against inflationary risk.

3. Dollar value

The dollar is considered a popular currency until it becomes a medium for trading worldwide. As soon as the USD depreciates, gold prices will rise because gold purchases are a hedge against the USD value risks.

Therefore, when the US Dollar depreciates, central banks that hold the US Dollar tend to diversify risk by investing in other assets or holding other currencies, including gold, resulting in higher gold prices.

4. The need due to demand and supply

Gold is like other products that have demand and supply. During the Chinese New Year, Chinese people buy a lot of gold. When there is a lot of demand, the price of gold will be high according to market mechanisms.

Nevertheless, demand for gold will come from three major sectors: jewelry, medical industries, and investment, mainly from investments. Countries are increasingly placing gold in reserve to reduce risks from US government bonds, such as China and India, where the economy is growing rapidly.

5. Baht value compared to the Dollar Value

Although the baht will not affect gold prices globally, the baht will affect domestic gold prices instead. Gold prices in Thailand will rise when the baht depreciates because Thailand cannot produce gold by itself, so it relies mainly on imports.

Gold markets generally use US dollars as their trading reference. Therefore, the exchange rate between the Baht and the US dollar is a factor affecting gold prices in Thailand.

These are five factors that directly affect gold prices. Gold is one of the most stable and inflation-proof assets. It can be purchased to make profits from short- and long-term investments at individual risk.

References from

finnomena / stock2morrow / thairath / thaipbs