With such a huge demand for gold coming from around the world, it is no wonder that the price is projected to reach an almost unbelievable $1000 per ounce. One of the biggest importers of gold is China, constituting a large chunk of the price hike. Most of the gold usage is jewelry related.
Supply is also a factor. With such a high demand, gold is becoming scarcer. Miners are searching for new sources to combat the possible shortage.
Another reason for the increase is the decline of the US dollar. Gold and the US dollar move inversely in value: when the dollar goes down, the price of gold goes up.
The Federal Reserve has a lot of control over the value of the dollar. When it raises interest rates, usually the value of the dollar goes up. Now, with the Fed lowering interest rates in hopes of promoting trade between banks, the value of the dollar is going down and so, the value of gold is going up.
If the US economy keeps heading in the direction it is going, at least for awhile, then we will almost surely see gold hit an all time high.
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