The London Gold Fixing is the standard benchmark for the price of gold. It involves a telephone conferencing call two times a day between the representatives of five bullion trading firms. There are also gold trading prices that go on during the day (gold spot prices) and are derived from the world's gold trading markets as they open and close during the day around the world.
Many factors affect gold and silver prices, but gold prices often fluctuate based on the demand (or the lack thereof) in the jewelry market. People are investing more in gold jewelry now than in years past. The increase in the demand creates an increase in current gold prices. Gold coin prices and scrap gold prices are also affected by this.
However, there is one factor that has a bigger influence on gold than all the other factors, and that is the weakening United States dollar. More individuals are investing in gold primarily out of fear for the dollar. As oil prices continue to rise, global inflationary pressures increase. Inflation is considered to be the erosion of the value of the dollar and its buying power. This causes people to move their money into more stable assets like gold, therefore driving the price up. Historical gold prices have followed similar trends.
Gold has what is called a good storage value. This was especially seen when there were threats of more terrorist attacks on U.S. soil and investors diversified their assets. A terrorist attack may hurt the economy by causing a decrease in the value of property and stock prices, but there is no impact on gold prices. Domestic and international prices of gold stand to be affected by the pending festivities and Olympic competition this year, but the experts are forecasting a slight cooling off in the price of gold as well as silver.
Other factors that may have an impact on current gold prices is the rise in the price of crude oil and geopolitical concerns. Political tensions in western Asia as well as the current trade deficit in the United States will create further devaluing of the U.S. dollar. When this happens, people will shift their investments to the precious metal to give them an advantage over the economic picture. Since there is an inverse relationship between the U.S. dollar and gold, the price of gold stands to affected positively.
A two-month high in the price of gold was attained due to the conflict in western Asia, and shortly thereafter, once the political climate had stabilized, there was a 4 percent drop in the price of the precious metal. If you study historical gold prices, it follows that the metal behaved predictably.