By Cheryl Simpsons

The price of gold, stock and oil prices, and the U.S. dollar all have very similar characteristics when comparing asset price inflations and momentum. The price of gold can affect the global market at various levels including the cost of oil and the world economy as a whole. It is still the world’s most valued commodities and the most important component of the global economy since 1945. Investing in gold and trading gold offers investors the same value, as the price of gold does not depreciate.

Some of the factors that may affect the price of gold include:

  • A recession – If the price of gold increases, this typically signals that the economy of the United States is struggling, and the dollar is probably weak.
  • Inflation rates – If inflation rates increase, then typically the price of gold trading and investment increases.
  • Low-interest rates – Low-interest rates over an extended period of time normally affect the price of gold and increase its value and price at that time.
  • A strengthened dollar – In turn, if the dollar is particularly strong this decreases the price of gold

The global economy

Gold and the U.S. dollar are very tightly linked. When one is strong, the other weakens in value. This affects the global economy. For instance, if the dollar is weak against the Japanese yen, the dollar is exchanged for a smaller amount of yen than in the past. As the dollar continues to weaken against foreign currencies, investors start to look for alternatives to investing in the dollar and turn to investing and trading in gold instead. This increased demand for gold causes the price of gold to inflate, as investors want a tangible asset that will hold its value.

Why is gold so important?

Gold is important because it is such a good indicator of how healthy the global economy is at any given time. A healthy gold price means that the U.S. economy is faltering. Investors then will turn to gold to protect their investments. If the U.S. economy is doing well, investors will return to stocks, bonds and real estate investments. Gold is the most important stable asset in the world when it comes to the global economy. Therefore, it is very important to all economies throughout the world.

Keep up to date with gold news

There are many websites that offer up to date coverage of the gold market for those wanting to invest or have already invested in gold. Following the stock market is also very important due to its direct correlation to the value and price of gold. If gold is doing well at any given time, it is worth selling some of it, and there are many places across the country that offers cash for gold.

Gold is the safe investment opportunity when other types of investments may fluctuate. If the economy is suffering, it is worth considering liquidating your real estate, stocks and bonds and investing the proceeds in gold.

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