1. Economic and political uncertainty: Gold is often considered a safe-haven investment during times of economic instability and geopolitical tensions. Factors such as trade wars, political unrest, and economic recessions can increase the demand for gold, thereby influencing its price.
2. Interest rates and monetary policy: Gold is negatively correlated to interest rates, meaning that when interest rates are low, the opportunity cost of holding gold decreases, making it more attractive for investors. Any changes in monetary policies, such as central bank actions on interest rates, can impact the price of gold.
3. Inflation and deflation expectations: Gold is often seen as a hedge against inflation, as it tends to maintain its value during times of rising prices. The market’s expectations and concerns regarding inflation or deflation can influence the demand for gold and thereby its price.
4. Currency value and exchange rates: Gold is traded globally in US dollars, so fluctuations in currency values and exchange rates can impact the price of gold. A weaker currency generally increases the price of gold, making it more expensive for foreign investors.
5. Central bank buying and selling: Central banks are significant holders of gold reserves. Their buying or selling activities can impact the global supply and demand dynamics, causing fluctuations in gold prices.
6. Investment demand: Gold is widely held by investors as a store of value and a hedge against market volatility. Changes in investment demand, either through exchange-traded funds (ETFs), futures contracts, or physical gold purchases, can influence the price of gold.
7. Global mine supply: The level of gold mining production and exploration activities can impact the supply of gold in the market. Lower mine production or disruptions in mining operations may lead to decreased supply and potentially higher prices.
8. Jewelry demand: Jewelry represents a significant portion of the demand for gold. Consumer sentiment and behavior towards purchasing jewelry, particularly in major consumer markets like India and China, can impact the overall demand and thus the price of gold.
9. Industrial demand: Gold is used in various industrial applications, including electronics, medical devices, and aerospace. Any changes in industrial demand, driven by technological advancements or economic factors, can influence the overall demand for gold.
10. Speculative trading and market sentiment: Short-term price movements of gold can be affected by speculative trading, as market sentiment and speculative positions can influence the demand and supply dynamics. Changes in sentiment, driven by news, market sentiment indicators, or financial market trends, can impact gold prices.