Information about the gold market
The market development of gold is primarily driven by inflation and the interest rate levels of central banks, particularly the Fed. Periods of historically high inflation have been favourable for the price of gold, as investors have sought to shift their focus from fiat money to gold, which is known as a safe haven. Therefore, central banks’ monetary policies to curb inflation play a key role in terms of the higher price of gold.
In trading, gold is denominated in dollars, which creates a reverse relationship with the dollar. When the US dollar increases in relation to other currencies, gold becomes more expensive, which reduces demand. On the other hand, when the US dollar decreases, the price of gold increases, because gold becomes less expensive for buyers outside the United States.
There are many types of players in the gold market, including physical players such as producers, processors, manufacturers and end users. The market demand continues to shift eastward, and China and India alone have accounted for more than half of the global demand for gold in recent years. As a result of regulatory changes in part, there has been a broad shift from OTC markets to open exchange trading in various asset classes.
Mining production accounts for the largest part of the world’s gold supply – typically 75 percent each year. However, annual demand requires more gold than new mining operations, and the shortfall is replaced by recycling.
The world market price of gold
Gold is primarily priced in US dollars per troy ounce (toz) and at a purity of at least 995 thousandths, which corresponds to around 23.9 carats. One ounce of gold weighs 31.103 grammes. The world market price of gold can have a significant impact on the profitability of mining sites because of regional differences in the gold content of mining grounds.