For millennia, gold has been a currency, commodity and investment at the same time. It has always been in demand for its beauty and value, and now it continues to move up. But sometimes gold prices go down. This happens for several reasons.
The underlying determinant of what will happen to gold in the future is monetary inflation resulting from the additional issue of unsecured money. The amount of world gold is growing at a very slow pace. Therefore, the more paper money is released into circulation, the higher the price of gold. Conversely, with a decrease in the volume of money supply, the price of gold falls. The fate of gold in the short term is determined by the stock market game. The most popular reason for the fall in the price of gold is the so-called stock overlap, in which market players place bets on increases beyond the possible level. Then the speculative bubble deflates and the price of gold falls. There is a more fundamental reason for the fall in the price of gold. During the aggravation of the economic crisis, investors avoid investing in money. At the moment, dollars remain the world's money, gold is not used as full-value money. Consequently, the price of gold, denominated in dollars, falls during an economic crisis. But this fall is usually temporary. After all, the central banks of large developed countries, in response to the aggravation of the crisis, increase money supply through a new flow of dollars, euros, pounds and other currencies. And as inflationary policy intensifies, so does the price of gold. We must not forget that gold is a raw material. In this regard, the slowdown in economic growth has an impact on the decline in prices for raw materials. Gold, while an investment haven, is classified as a raw material. And the decline in commodity prices helps to stabilize the situation with inflation, the growth of which, as already noted, leads to an increase in gold prices. Gold prices are reduced due to automatic trading sales. This occurs when the position of investors is insufficient to finance losses in the stock markets. In such a situation, with the already falling price of gold, automatic trading programs get rid of gold assets, as a result of which there is a sharper decrease in its price.
