Factors affecting price movements of gold

70 years before the 20th century, gold prices were decided by national governments or central banks, international gold prices stable. The early 70s, the U.S. dollar price of gold is no longer directly linked to the market price of gold gradually, changes in factors affecting the price of gold increasing, specifically, can be divided into the following areas:

1. Supply factors:

(1) the stock of gold on earth: the world that there are about 137,400 tons of gold, while on the groundstock of gold is still about 2% per year growth rate.

(2) the demand and supply: the annual supply of gold is around 4,200 tons, the new output of gold each year accounted for 62% of annual supply.

(3) the cost of a new gold mining: gold mining around the average total cost of just under 260 U.S. dollars / ounce. Since the development of mining technology, gold development costs over the past 20 years, decline.

(4) gold-producing country's political, military and economic situation changes: in these countries, any political, military unrest no doubt will have a direct impact on the quantity of gold produced in the country, thereby affecting the world's gold supply.

(5) central bank selling of gold: the Central Bank is the world's largest holder of gold in 1969 to 36,458 tons of official gold reserves, accounting for all the surface gold stock was 42.6%, and by 1998, official gold reserves of approximately 34,000 tons, accounting for all the gold mining stock of 24.1%. Calculated at current production capacity, which is equivalent to 13 years of world gold mine output. As the main use of gold reserves by a significant asset for the production of jewelry a gradual change of metal materials, or to improve its balance of payments, or to inhibit the international price of gold, so, 30 years, the central bank gold reserves both in absolute terms and relative number of greatly on the decline, the decline in the number of major stock sell-off leaning on the gold market gold reserves. For example, the Bank of England's massive sell-off, the Swiss Central Bank and the International Monetary Fund gold reserves to be prepared to reduce the recent decline in the international gold market, the main reason for gold.

2. Demand factors: demand for gold and gold is directly related purposes.

(1) the actual demand for gold (jewelry, industrial, etc.) changes.

In general, world economic development speed determines the overall Xu Qiu Le gold, such as in microelectronics field, increasingly used to protect the gold Zuo Wei Ceng; in the field of medical Yiji construction Zhuang Shi Deng, Jinguankeji of Jinbushide gold Tidai Pin Buduan appear, but the gold metal for its special nature still increasing its demand.

In some areas due to local factors have a significant impact on gold demand. As has always been a great demand for gold jewelry in India and Southeast Asian countries due to financial crisis, since 1997, gold imports have fallen sharply, according to the World Gold Council data show that Thailand, Indonesia, Malaysia and South Korea the gold demand fell by 71 %, 28%, 10% and 9%.

According to statistics, China's per capita gold consumption is only 0.2 grams, and compared to the world's largest gold consumer, there is a big gap. India's per capita gold consumption is 0.85 grams, equivalent to China's per capita gold consumption more than 4 times. From China's economic development and per capita income, China is much higher than India. Therefore, China has a very large potential consumer of gold, the outlook is very impressive.

(2) preservation needs.

Central Bank gold reserves has been used for prevention of domestic inflation, an important means of regulating the market. For ordinary investors, investing in gold is mainly in the inflation situation, to achieve the purpose of preservation. The trend in the economic downturn, because gold is more than monetary assets, insurance, lead to increased demand for gold, gold prices rose. For example: three dollars in the Second World War crisis, the U.S. balance of payments deficit becoming a serious problem, countries hold a substantial increase in the dollar, the market value of the dollar's confidence, investors rush to buy a lot of gold, a direct result of the Bretton Woods system of bankruptcy . 1987, because of depreciation of the dollar, the U.S. deficit increased instability in the Middle East, also have prompted the international price of gold surged.

(3) speculative demand.

Speculators in accordance with international and domestic situation, using the gold market gold price volatility, combined with the gold futures market trading system, a large number of "short selling" or "cover" the gold, gold demand artificially create a false impression. In the gold market, down nearly every large hedge fund with short-term borrowing gold and selling in the spot gold market in COMEX gold futures to build the large number of short positions. In July 1999 the price of gold fell to 20-year low, the U.S. Commodity Futures Trading Commission (CFTC) released data showing speculative short positions in COMEX close to 900 million ounces (300 tons). When the trigger a lot of stop-loss selling, the gold price fall of the Foundation took the opportunity to cover profit, a slight rebound when the gold from the manufacturers selling to hedge long-term suppression of gold prices to rise further, while giving new opportunities fund re-establishment of short selling positions when the price of gold formed a decline are falling pattern. Purcell R & D center of high gold and silver high-Gold, said: "Now the price movements of gold market is not entirely decided by market supply and demand for simple, nor by the central banks in the meantime a simple game, in which speculative factors on the impact of the price also has a large proportion. "