Gold! It is one of the most popular precious metals in the world and the price of gold per ounce is rising these days very rapidly. It is not only used as an ornament but also as an investment product.

Gold as an Investment

Investors have been buying gold for years at low prices and now are deciding to sell it because the price of gold has increased very rapidly as of late. Thus Gold behaves more like a currency than a commodity. It has been used for a long time in place of money. Before the invention of money, gold was the best method of transferring value from one place to another. The economy of the world started with the gold standard but due to lack of sufficient mobility, the gold standard was discontinued. The other reason for stopping the use of the gold standard was that the countries which were having abundant gold resources were getting an undue advantage over other countries. Until 1971, the United State Dollar was also directly pegged to gold and the price of gold per ounce was directly related to USD.

Factors which affect Price of Gold Per Ounce

Gold is also a commodity and hence like most other commodities, the price of golf per ounce is also affected by its demand and supply ratio in the market. The only things which create a remarkable difference between gold and other commodities is its use. Gold is never consumed, instead it is stored safe by people around the world. Practically speaking, gold never goes out of market. It just keeps rolling between investors.

Some are short term investors who earn profit by trading gold and some are long term investors who keep gold with them and sell it in market when they need money or the prices of gold are high. The World Gold Council says that 80% of the annual production of gold goes into jewellery and industrial production while only 20% is traded through retailers and gold ETFs which have a big impact on the price of gold per ounce. There are several other methods which the investors use to invest in gold like gold bars, coins, ETFs, gold certificates and gold derivatives etc.

Central Banks can affect the price of Gold per Ounce

The role of the central bank in each country as well as the International Monetary Fund is highly important as far as the price of gold per ounce is considered. When the central bank of a country wishes to increase its gold reserve and buys gold from international markets, the price of gold per ounce goes up drastically.

The price of gold per ounce tends to run contrary to the interest rates prevailing in the country. If the interest rates on loans go up then the price of the gold falls down and when the interest rates fall down the price of gold per ounce accelerates upwards. There are several other factors like short selling, war and national emergency etc. which can affect the price of gold per ounce.

What price of gold per ounce shall I expect in next three months?

Experts believe that the price of gold per ounce may rise even futher into the mid 2011. Thus it is considered by many the right time for the investors to buy gold and earn good profits in next few months. lthough forecasts don’t hit the target every time, they do tend to help experienced investors to a great extent.

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