Like with most investment vehicles, the value of gold can be considered as volatile over the short term. Nevertheless, this precious metal has always maintained its value over a long term period. This is the reason why most people still see gold as a viable investment medium.
If you are wondering whether the price of gold will fall, then the answer is yes.
But, in the same manner, the price of gold can also spruce up because several factors affect that price of gold, and some of these are listed below.
One of the main factors that affect the price of gold is the current supply and demand for this precious metal. Like with any other commodity, great demand and a constrained supply will tend to pull the value of gold up. On the other hand, a low demand with an immense supply will lower down the price of gold. It follows that when you attempt to apply for a gold loan while its value is high, then you will be able to get a larger loan amount. Conversely, you may not be able to maximize your loan proceeds if you get a loan against your precious metal when its value is low.
Another factor that can affect the price of gold is inflation, which is also known as the rising price of commodities and services. The value of gold and inflation seem to have a direct correlation because as inflation rises, the price of gold tends to follow. This is in contrast to the value of other precious assets such as antiques, which seem to be independent of inflation. While people may see inflation as negative, it is actually a sign of economic growth and expansion.
The market condition can also affect the value or price of gold. The market conditions are greatly influenced by speculations made by investors such that the best time to buy gold is when investors theorize a drop in its value. This usually happens during global economic distress or when there are great currency movements in the market.
Geopolitical factors also affect the value of gold in a rather obscure manner. This is because during crises such as wars, the value of gold increases while the value of most asset classes continues to decrease. For this reason, investors tend to hold on to their gold assets even during the point when it has a rather low value because they are guaranteed that this precious metal can pull their investment portfolio up during trying times.
If you are considering investing in gold, then go ahead because even if the value of gold is at its lowest, there will come a time when it will once again rise. Buying gold at a low value is actually a wise move because you have a greater margin of profit once its value shoots up. Rest assured that in the long run, your gold investment will be worth it.