It can be expected that the gold price might increase in the coming future if the other factors that lead to currency depreciation get normalized. If we see the S&P/ASX 200 RESOURCES for the resource sector, we see that the price of gold on 27 November 2018 has increased by 0.51%. There are many factors which impact the price of the gold. The key drivers on which the performance of the gold depends on:
- How strong the currency of a particular country is related to the US dollars.
- The economic growth and the market uncertainty of that particular country that includes inflation, interest rates, income growth, the confidence of the consumer and small risks are another set of 3 reasons for the price movement of gold.
- The other factor which impact the price movement is due to the derivatives positioning. To hedge the risk of uncertainty in the gold price, people enter into a derivative contract to mitigate risks.
- And one of the most important reasons i.e. the demand and supply of the gold which considers the production of gold through mining and its demand across the world.
Gold is a unique asset not only in the form of jewelry but also an important source of investment. If an investor adds gold to its investment portfolio helps in enhancing the portfolio by giving adjusted returns.
Based on OECD economic outlook prediction, there is year on year % increase in the real GDP growth of the company by 3.1% in 2018. It is further expected that there will be a fall in the real GDP growth and it will reach 2.9 % in 2019 and will go further down in 2019. If this will be the scenario of the economic growth in Australia, then there is a chance that it might have a negative impact on the prices of gold.
The other factor that might impact the gold price might experience if the Australian economy gets impacted by the crude oil prices. The crude oil prices are hugely impacting Australia as it leads to currency depreciation regarding USD. Currency depreciation leads to a huge impact on gold prices.
Also, Australia is a hub for gold where there are some gold explorer company who exports gold across the globe. Australia being the hub of gold boosts the Australian economy. The demand for gold will try to maintain a positive trend. Hence Australia will be able to meet the requirements of its client shortly as well.
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