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Market Watch

Thursday, 22 November 2012

Mcx Gold Tips

Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I. After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000.

There are some factors that affect the Gold Price:-

1. A weaker U.S. dollar exchange rate is usually encouraging the increase in world gold prices. This is because investors choose to sell their dollar and then buy the gold with the hope that gold can protect the value of their assets.

2. Due to the rising cost of production in gold mining, strikes by gold-miners, worsening political situation, the sharp increase in the oil prices after the Iraq war, and terrorist attacks, a decline in the gold-mining production has been recorded for the past 5 years.

3. The global economic situation. Approximately 80 percent of the total supply of gold has been used by jewelry industry. Jewelry consumption is a major influence on the demand side. As economic conditions improved, the need for gold tends to rise. However, the most sensitive industry to be influenced deeply is jewelry industry.

4. Interest rate. When interest rate rises, peoples tend to keep money on deposit better than gold which does not earn interest (non interest-bearing). This will cause pressure on the price of gold. Conversely, when interest rate fall down, the price of gold will likely rise.

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