Thursday, September 29, 2011

Why the Gold Price Falls

The price of gold back down for the fifth time in six sessions as the dollar reversed course (rebound). The condition is reducing demand for gold as an investment alternative. Currently people to trade gold as a commodity.

Trading gold futures for December delivery fell 34.40 U.S. dollars or 2.1 percent, to USD 1618.10 at 13:43 am local time on the COMEX, New York. Gold prices were down 16 percent from a record price of 1923.70 on September 6. While the U.S. dollar rose 0.7 percent today against a number of other currencies.

Factors that influence the price of gold
Past, Gold is one of the instruments to be hunted when economic conditions worse to secure investment because the price tends to be stable or becomes hedging instruments when the economy improves to protect the investment from the surge in inflation. But lately the function of gold in the big picture began to change somewhat even function as a safe haven and hedging is still an impact.

Gold price in recent months is influenced by various factors, such as the U.S. dollar devaluation, diversification or changes in foreign exchange reserves, the risk appetite on assets such as commodities and concerns on inflation.

One of the biggest factors affecting gold price is a commodity market, which trade commodities like crude oil products, sugar, coffee, soybeans and others. Rise and fall of gold price tend to be on the steering wheel by the performance of commodity markets.

In recent months the market is driven by the risk appetite and avoid risks. When the appetite to increase the risk of market players get into some of the financial sector, such as stocks, currencies, yielding a high return and commodities.

Usually this risk appetite increased when the market expect the global economic conditions improve and vice versa, if the market is unsure of the economic conditions they fled to safe-haven assets or chasing the U.S. dollar. In this space a lot of moves in gold price is more likely to follow commodity markets than the problem of safe-haven or hedging positions.

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