Commodity Online
NEW YORK: The economic packages announced by the US and other countries have a big impact on Gold prices. Because this has fuelled speculation that the economic packages will cause hyperinflation and that has contributed to gold’s popularity.

So, gold’s popularity is remaining strong due to the current weaknesses in global economies. Buyers in the US are still opting to purchase the precious metal due to fears over hyperinflation, which would see the value of the dollar fall.

The present situation is that the value of gold has gone down, which means if somebody offered you a $100 in cash or $100 in gold, you would take the gold.

It is a relatively hard metal to acquire due to its finite quantities, meaning that it will always be accepted in every country.

Experts said that everybody should keep hold of a little of the precious metal. Richard Beales recently told UK’s Daily Telegraph that investors are opting to purchase Gold as a hedge against the risk of both inflation and deflation.

Gold is money that offers no yield and which is continually valued against fiat currencies that offer a yield.

According to experts, gold is a highly durable asset, and thus...it is the demand for the existing stock, as opposed to the new flow, that must be modeled. The willingness to hold the stock of gold depends on the rate of return available on alternative assets.

So, the fundamental long-term force driving the gold price is not mine supply nor jewelry demand, but real interest rates, specifically US real interest rates on account of the US dollar’s status as the world’s reserve fiat currency

Decreasing real interest rates are positive for gold as it lowers the opportunity cost of holding the metal. However, it is not a linear relationship. Instead, gold prices tend to significantly increase only if real rates become negative.

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