First, before embarking on real-time gold price analysis, you need to understand how gold trades on the stock exchange and what determines its price in the market.
Like all assets listed on financial markets, the value of gold is determined solely by the supply and demand mechanism in the world market for this product. In fact, in this market, orders to buy and sell gold are issued constantly, and these orders define supply and demand.
Thus, strong demand and weak supply will cause the price of an ounce of gold to rise, while weak demand and strong supply will cause it to fall.
Here it is also important to understand the auction price of gold. It is a daily procedure that sets the reference price for gold by comparing supply and demand so that as many transactions as possible can be made.
This considers buyers and sellers and the size of their orders. Therefore, the auction price clearly measures the supply and demand for gold in the centralized global market.
Financial markets are cyclical, with capital investment flowing from silver and gold to the banknote and vice versa.
Globally, investors prefer to hold their funds in the form of precious metals, especially when a state’s economy is poor, during crises, wars, defaults, and when there is no confidence in the stock markets.
During conventional economic stability, investors prefer the values of such metals and invest in the stock market. The United States is considered one of the largest holders of gold reserves, and its stock market is considered the largest in the world.
Let’s consider the interrelationship between these markets. To understand the precious metals market, discover its main differences concerning other instruments known in the world financial markets, leaning towards the weekly Down Jones graph against a “basket” of equal parts of gold and silver.
The value of all shares in a portfolio is automatically converted to US dollars, which makes it possible to buy it with portfolios, automatically creating a new financial unit – a PCI (Personal Composite Instrument).
The new deep bottom was in the middle of 2011. With a high probability, it can be said that the downward cycle ended at this point, and now we can see a change and the beginning of the next great cyclical market. And interestingly, this occurs against the backdrop of new highs, DJI records, and a deep correction in the gold and silver markets.
