It might be a sign that the economy is getting better, or it just might be showing that the popularity and rarity of gold is decreasing. However, gold prices did spike in February, some economists are saying the reason is Valentines Day. They have been slowly rising the last three quarters after prices fell 4% in June. On March 31st gold prices reached $1,430 an ounce for the first time in five sessions. A good sign for America’s economy, especially considering the unrest in Libya and happenings in Japan. The demand for gold is up; making countries that produce the gold, like Egypt raise the prices of gold. It is unclear if the quantity of gold is low and that is why the prices are spiking, but the demand will probably start dropping again due to the high prices.
-Haley M.
I do not think the economy is improving based off the price ranges of gold; however, the prices of gold are increasing at a high rate, that soon the demand will decrease but can also turn gold into a luxury that only a few people can afford similar to the situation of luxurious cars. The possibility of scarcity can also be into play similar to the situation of diamonds since they are both scarce and cause a fortune. Nevertheless, I think the supply will rise as the price rises and in the long run demand will decrease. Eventually, not many consumers will be able to buy gold and will substitute gold with another cheaper resource if the prices of gold keep increasing. Another possibility that could affect gold prices is that other countries can be facing economic crisis and will try to make up for economic loss by selling gold to the United States at a higher price since they are aware that the U.S. has quite a high demand for gold nowadays.
ReplyDeleteAbby G.
http://www.bloomberg.com/news/2011-03-28/gold-declines-as-improving-u-s-economy-reduces-demand-investment-appeal.html
ReplyDeletehere is the link.. i guess it didnt post right
Good point Abby, other countries are really effecting a lot of American goods, one very good example could be the price of oil. In Egypt and Libya those are two major places where gold is found. And with the conflicts going on right now finding gold isn't at the top of their to do list.
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