Gold is a precious metal that has always been considered one of the most profitable and reliable investment instruments. The price of gold never stands still, it is constantly changing and depends on the global geopolitical situation, the volume of supplies in the precious metals market and changes in the currency market. Experts say that 2018-2019 is the time to invest your savings in a gold bank deposit or in precious jewelry, since the price of these assets will change significantly by 2020.
How is the price of gold formed
In Russia, the cost of gold is set according to world prices. In turn, the global price is determined at an electronic auction in London. Every day, morning and evening, an electronic platform balances the cost indicators of supply and demand among bidders for 45 seconds. The auction is attended by six of the largest banks in the world. Russian banks are not included in this number. The price is determined in US dollars for one troy ounce, which equals 31.103 grams of precious metal. The electronic method of determining prices has been working only since 2015. Prior to this period, the gold exchange rate was determined during the London fixing - the persons representing the banks held tenders live.
The Bank of Russia calculates the value of gold bullion based on the values of London trading, by converting into rubles at the official exchange rate of the US dollar. On the official website of the bank, anyone can get acquainted with the rate of the precious metal. It is such a monetary equivalent that is used in Russian accounting and in credit offices.
The cost of gold at the beginning of 2018 was $ 1,205.55 per ounce. During the year, there was a negative dynamics in price changes and by November the cost of one troy ounce was $ 1201.10. Experienced traders say that such a pricing policy indicates possible major changes in the gold market in 2020.
Fact: Until 1944, the basis of the global monetary system was gold. Then the American dollar replaced the precious metal. Until 1971, the “gold standard” continued to operate, and the dollar was “tied” to gold. That is, any currency could be exchanged for dollars, and dollars for gold. The gold standard has been replaced by the era of floating exchange rates.
Forecasts for 2020
Professional dealers in precious metals can forecast gold quotes for several years to come. Analysis of prices over the past years allows experienced traders to anticipate a sharp change in the value of precious metals up or down. As history shows, the rise in price of gold always occurs at a sharp jump, and then there comes a period of slow and slight decline.
The last 7-8 years, the course for gold is in a downward state. The jump in prices that occurred in 2010 has not yet repeated. Most of the leaders of world banks are confident that in the near future there will be a sharp increase in the value of gold bullion.
The world's leading economists, based on a technical analysis of the precious metal, are mostly similar in opinion that an active increase in gold prices will occur in 2020. The idea of how much prices can rise is different for everyone. Some analysts suggest that the price can reach up to 5 thousand dollars per ounce, while others say about a 100% rise in price.
There is an opposite point of view.Some experts, on the contrary, believe that the price of precious metals will continue to sag even lower. And only a new round of large-scale economic virus can provoke a “breakthrough” in the course of the precious metal.
Note: Analysts of the precious metals market explain that the tense world situation, sanctions and the tense relations between the United States and China have already led to increased demand for gold. The next consequence of the global confrontation will be the growth of quotations. Investors who want to hit a good jackpot are already actively buying gold.
Factors Affecting the Price of Gold
The dynamics of gold prices depends on a combination of several factors or on each of them individually:
- The inevitable depreciation of the dollar. The dependence of the value of gold on the dollar is inverse. The lower the dollar exchange rate, the more expensive the price of precious metal and vice versa. By printing unsecured currency, central banks increase US debt at an enormous rate. The more dollars, the less their purchasing power.
- Increased demand. According to the law of a market economy - “the higher the demand, the more expensive the price” the cost of precious metal is growing steadily. Given the unstable geopolitical situation and the precarious situation of world business, due to sanctions, the demand for gold has increased significantly. Gold assets have always been considered the most reliable way to save capital, especially during times of large-scale international crises. In addition, modern electronic industry and dentistry provide a constant and increased demand for precious metals.
- Buying gold by state banks. This factor can also be attributed to the law of supply and demand. With the activity of banks in relation to the increase in gold and foreign exchange reserves, buying is very large and fast. This instantly responds with an increase in value.
- Production volumes are gradually falling. World statistics show that despite the fact that the volume of gold mining and production in some countries has increased, total global production has been gradually declining since 2001, and by 2065, the reserves of the precious metal, according to analysts, will completely run out. A shortage of precious metal for this reason, of course, has not yet arisen, but the cost of one gram is steadily creeping up.
Experts, making forecasts, evaluate the combination of factors in the current time and future trends.
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