Why did the gold price fall?


The fact that the fall in the price of gold, the experts warned in advance. For a long time, since the last years of the 20th century and up to 2007, the price of the precious metal has steadily increased. This was directly related to the growth of the economy as a whole and a favorable situation on the world market. Investment volumes grew, the industrial and construction sector developed. Prices for natural resources, including the price of gold, had a clear positive vector. The slowdown in prices for this precious metal was the first symptom of an impending crisis.


Although many participants in the global market did not notice.

After the financial crisis broke out, a slight drop in the price of gold ceased, and a sharp increase followed. In this context, it should be noted that the precious metal is a currency, raw material and an object of investment. Such a complex property makes it a special subject, the attitude to which is different. When the financial crisis of 2008 began, many stockholders rushed to get rid of them and buy gold with the money they received. Such a massive demand for this resource naturally spawned an avalanche-like price increase. But the fact of owning a gold bullion does not bring income yet. It is a form of preservation of life values.


And life values ​​are quite familiar and necessary in everyday life objects. To go by car, you need to refuel it. At the gas station you can pay only with money, the “piece” of gold is simply not accepted here as payment. For this simple reason it is necessary again, as they say, to bring metal to the market. As a consequence, there is another drop in the price of gold. Like all processes in nature and the economy, the price of any resources fluctuates within wide limits. Experts do not get tired to talk about this, however, the trend change always happens unexpectedly.


China's booming economy requires various resources. Oil, timber, ferrous and non-ferrous metals are supplied here from different regions of the globe. Precious metals are no exception. Gold prices, as well as any other commodity, are formed based on market conditions. As you know, the electronics industry is one of the largest consumers of the precious metal. In order for electronic devices - computers, telephones, tablets - to be accessible to a wide range of consumers, they must have an adequate cost. This means that you need to acquire the necessary resource at the lowest price.


In other words, the fall in the price of gold receives full approval from the companies-manufacturers of electronic equipment. It is likely that this process will lead to lower prices for computers. To this we must add that the jewelry industry is a traditional consumer of precious metals. The production of jewelry at all times required high quality starting material. Precious jewelry are in demand in any economic situation. Thus, we can assume that the current decline in the price of gold is a temporary phenomenon. In the near future, the moment will come when this process will flow in the opposite direction.

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