Gold Interest Rate

Gold Prices Follow Interest Rate

When interest rates rise, there is a great effort to keep the money on deposit than gold which does not earn interest (non-interest-bearing). This will put pressure on the gold price. Conversely, when interest rates fall, the price of gold will tend to rise.

In theory, if the short-term interest rates rise, the price of gold down. In Indonesia, this theory does not always work.

In 1998, due to a sharp decline of the rupiah against the U.S. dollar, the government raised interest rates significantly. The hope, restrain the rate of increase in the U.S. dollar exchange rate. As a result, despite rising interest rates, gold prices also rose.

Global Situation Economic

Global Situation Economic

About 80 percent of the total supply of gold used jewelry industry. Consumption of jewelry is a great influence on the demand side.

As economic conditions improved, the need for jewelry tends to rise. However, from the statistical data visible demand for jewelery is more sensitive to fluctuations in gold prices than the increase in economic conditions.

The fall of the level of jewelery demand during recessions in 1982-1983 mainly due to rising gold prices simultaneously. The fall of the level of jewelery demand in times of recession the early 90's more in line with the above, at the time the gold price to go down.

Gold Supply and Demand

Gold Supply and Demand

One example of things that can affect the supply and demand (supply and demand) of gold is like a scene in the mid-1980s. At that time, forward sales by mining companies always blamed for the rise in gold prices. In terms of business, the actual behavior of mining companies is reasonable. By selling forward when gold prices rose, they can secure the mine output prices at a fairly attractive price.

As another example, the case in mid-1998 in which the price of gold continued to decline. At that time, central banks in Europe said it would reduce its gold reserves in respect of plans to implement the euro currency. Gold prices plunged around 290 dollars per troy ounce.

Gold Price Analysis

Gold Price Analysis

Gold has a limited supply and not easily available, while demand for gold has never diminished, resulting in the price of gold tends to increase from year to year.

In everyday reality, the price of gold does not only depend on the situation of demand and supply, or supply and deman. The price of gold is also affected by the overall economic situation.