Summary of Gold Price History
At the turn of the modern century, the year 2000 the Gold market was settling at around $270 per troy ounce, or £185 per troy ounce. If we analyse this market up until 2010 gold saw an average of price of around $1100 per troy ounce, or £750 p/troy ounce. This exponential rise over 10 years in trading, whilst seeing some in-year fluctuations, presented a market rise of 407.4% in the market price of gold. This gradual and consistent rise was interpreted by many to be the modern gold rush. During these exciting years, companies could now make it incredibly simple for all types of investors to purchase gold through websites and online platforms.
And many investors could see their long-term gold holdings reach large profits and potential when both buying and selling gold. Looking more recently in the last 10 years, the Gold Price has once again proved to maintain its safe gold haven. In times of economic uncertainty and global crisis the gold market has always done very well. Indeed, with the unprecedented events that have been seen during the first and second quarter of 2020, it is not surprising that gold has reached historical heights. Making this a good time for investors to release gold, as well as see the demand to buy gold surge enormously.
What factors would influence the gold price?
Whilst here at Hatton Garden Metals we are not fiscal or market analysts we can certainly reason as to what factors have historically impacted the rise and fall of the gold market.
When we see any sudden drops or highs in the gold market this will usually correlate with a global economic factor, or a global crisis. An example of this in our recent history would have been the passing of Brexit, or the stock market crash of 2007/8.
Gold is effectively a currency, so unlike other commodities that can be priced relative to a supply and demand algorithm, the price of gold is influenced by a variety of factors. Central banks and that countries trading of their own gold and paper money printing will influence the price of gold. Inflation and interest rates will also have an impact on how gold is traded and priced. When inflation is high, the value of paper currency will fall with regards to the purchasing power of paper money. When this happens, demand for gold increases as people want to invest their money in a commodity or currency that doesn’t lose value.
The cost of mining gold is unbelievable expensive, as a result, the mining and therefore supply of physical gold is responsive to the market price point of gold. If the value of gold falls too low to make the production worthwhile, this will slow, and this in turn will affect the price as demand catches up with supply and vice versa.
Throughout our history, gold is one of the oldest and most reliable form of currency and as a market is fascinating to watch and be a part of.