Why Gold Keeps On Rising

By Thomas Pline

Gold plays an additional role, which is to serve as a store of purchasing power. It can also be used in productive processes but the bulk of gold demand comes from its use as a reserve.

The fact that markets are in different time zones, enables transactions for 24 hours. The main currencies used in transactions are the dollar and euro. At a time when sterling was the dominant currency, but not now.

Gold is known as what's called a neutral as it is not tied to any country in particular so the price of gold is not under the influence of government. Gold is an important mover of the forex market.

As a reserve the price of gold is tightly tied to the behavior of other non related investment alternatives like bonds, equities and currencies. The price of gold tends to appreciate time of political or monetary instability and low liquidity. Other events such as natural disasters can also affect the price of gold.

The price of gold has been rising due to the weak dollar and the unstable situation in the equity markets. However, its real price, adjusted for inflation, is much lower today than it was in the early 1980s.

The trend of gold has been up for the last six years has gold has risen from $330 to over $1,150 an ounce as recently as December 2009.

Many traders buy and sell gold in the currency market purely as speculative plays trying to make profits from small and large fluctuations in price. This does not mean trading gold is easy, because gold is mostly used as a reserve it is subject to many psychological and monetary factors.

When investing over short time frames you are able to earn large amounts of money however at the same time it can be very risky. You have to weight your investments and risk carefully. - 23222

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