Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

The Surprising Major Demand Factor That Drives The Gold Price

Published 12/16/2018, 11:51 PM
Updated 07/09/2023, 06:31 AM

Investors will be surprised to know the main factor that drives the gold price. It is not the oil price or market. While the price of oil has been a good indicator for the price of gold over the past 50+ years, it has not indicated much over the shorter term. There is a gold market demand factor that seems to move the gold price more than any other indicator.

Precious metals investors might believe that physical gold investment demand is one of the leading drivers of the gold price. While that may have been true in the past, or after an economic and financial meltdown like we had in 2007-2008, physical gold coin and bar demand does the exact opposite of the gold price.

In looking at the data over the past four years, physical gold investment increased when the price declined and rose when the price fell:

Physical Gold Investment Vs The Gold Price

As we can see in the chart above, the green bars show that when the gold price (white line) decreases, the demand for gold coin and bar increases. In Q3-Q4 2015, when the gold price fell to new lows, physical gold investment demand increased to 305 metric tons in Q3 2015 and 300 metric tons in the next quarter. Also, when the gold price fell from a peak of $1,335 in Q3 2016 to $1,222 in the last quarter of 2016, gold coin and bar demand surged to 379 metric tons. We can also see the same trend in Q3 2018 when the gold price declined.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.