What are the factors influencing fluctuations in gold prices?

Hello, regarding why gold prices fluctuate, it's actually not that complicated. I'll give you a few analogies, and you'll understand.

Imagine gold as a "hard currency" in the international financial market, universally recognized. Its price is mainly influenced by the following factors:

1. Strength of the US Dollar: This is the most direct factor. Gold is priced in US dollars internationally. You can think of them as two ends of a seesaw. When the dollar strengthens (e.e.g., 1 USD can buy more RMB), fewer dollars are needed to buy the same ounce of gold, causing gold prices to fall. Conversely, when the dollar weakens, gold prices tend to rise.

2. Bank Interest Rates: You earn interest when you deposit money in a bank, but if you convert your money into gold bars, those gold bars won't "give birth" to smaller gold bars. So, when bank interest rates are high, many people find saving money more appealing. They might sell gold to deposit cash, leading to fewer gold buyers and a drop in gold prices. Conversely, when interest rates are very low or near zero, saving money becomes less attractive, and people are more willing to hold gold to preserve its value, causing gold prices to rise.

3. Global Instability: Gold has a nickname: "safe-haven asset." Whenever major international events occur, such as wars, economic crises, or political turmoil, people worry that their stocks and currencies will depreciate, leaving them feeling insecure. In such times, many people's first reaction is to buy gold because it has been a recognized symbol of wealth for thousands of years, offering a sense of security. When more people buy, the price naturally goes up. Hence the saying, "When cannons roar, gold pours in."

4. Inflation Expectations: Inflation, in simple terms, means money becomes less valuable over time. What 100 yuan can buy today might cost 110 yuan tomorrow. If you anticipate a significant rise in future prices, your cash holdings will shrink in value. To prevent their wealth from eroding, many people choose to buy gold. In the long run, gold's value is relatively stable and can hedge against inflation. Therefore, when people expect inflation, they buy gold in advance, driving up its price.

5. Supply and Demand: This is like cabbage in a vegetable market: if more people buy, it gets expensive; if more people sell, it gets cheaper. This "buying and selling" not only includes ordinary people purchasing gold jewelry and bars but, more importantly, central banks worldwide. Central banks are major gold buyers. If some national central banks start accumulating large gold reserves, it sends a strong signal, significantly boosting market confidence, and gold prices tend to rise. Additionally, the amount of gold mined (supply) and demand from industries and the jewelry sector (e.g., wedding seasons in India and China) also have an impact.

In summary, gold price fluctuations are a comprehensive reflection of global economic, political, and financial conditions. When you look at gold prices, you are essentially observing changes in global sentiment and the flow of money.