Why is it said that a fall in price of gold a sign of improvement in the economy?
There are a lot of factors on which the price of gold depends.One major factor is the confidence of the people in the economy.If people have more confidence in the economy they will stop investing in gold and invest in other avenues like stocks and shares and property where the yields are high.Since the demand also falls for gold at such time the price of gold goes down. Also the price of gold and inflation normally move together and expectation of lower inflation results in lower gold price as it acts as a hedge against inflation. This is the reason why lowering of gold price is seen as an improvement in economy.
There are a lot of factors on which the price of gold depends.One major factor is the confidence of the people in the economy.If people have more confidence in the economy they will stop investing in gold and invest in other avenues like stocks and shares and property where the yields are high.Since the demand also falls for gold at such time the price of gold goes down. Also the price of gold and inflation normally move together and expectation of lower inflation results in lower gold price as it acts as a hedge against inflation. This is the reason why lowering of gold price is seen as an improvement in economy.
No comments:
Post a Comment