The price of gold just like any other commodity depends on two factors, demand and supply. The higher the demand and the lesser the supply sends the price of gold hurtling upwards and the opposite (when supply exceeds demand) the price is sent hurtling down a slope. This theory not only applies to gold, but also to every other commodity that is traded. Precious metal trade however is a much more stable trading platform in times of peace compared to other commodities that are swayed by market sentiment twenty four hours each day. The fact that they are sensitive towards market sentiment makes most other commodities more of a gamble than anything else. On the other hand buying and selling gold or precious metals take on a different form. They are not volatile and hold steady incline or declines in prices. However trading gold is a long term venture and those seeking to make quick money from trading the precious metal will find it difficult or mundane to weave through the mazes that straddle the gold market. Gold buyers are usually waiting for gold prices to go below the daily gold spot prices before they buy gold and gold sellers on the other hand wait for the prices to peak above the spot gold price for the day before moving in to sell gold. This waiting game goes on and on till one party gives in.
Prices of gold have remained steady for the past 5 years until recently when it took a steep plunge in the market as gold sellers were flooding the market and converting their gold for cash in huge sums. The recovery process only began in early august as the prices of gold crept up the ladder again and found its home at a stable rate currently. Trading gold has come to a point where virtual gold has been created to facilitate the enormous volume of gold being traded. There is lesser gold than actually being traded by nearly 20%. This deficit is made up of âpaper goldâ which is basically a paper that says you have gold and back by the trading house or security commission that issues this âclaimâ. Gold trading typically is on the rise as economist fear of a looming global financial meltdown. Gold at that point in time will be the only tangible money along with silver that most humans will be willing to trade for.