Why are gold prices rising?

Answer 1

Because after topping $1,000 an ounce in Mid-February, the price of gold bullion to $940 Monday. This is very close to a brand of technical support at $935. Yet another layer at $900 which should keep it lowing much longer. Despite the lull these are very relatively high prices historically, yet as we face the threat of substantial global inflation as a result of recession fighting, gold's upside is enormous. Adam Sauss, a co-manager of Appleseed Fund (AAPLX), a diversified fund with a significant state in gold, says all the steps governments are taking to fight the downturn will lead to inflation. "In fact, if you think of the ultimate way out of the housing mess, it is to devalue the dollar to get housing prices up again," he says.

Strauss is no gold bug or hard-money zealot; his fund bills itself as "socially responsible," and he says he favors investments "that allow shareholders to sleep well at night." Gold fills that bill. Appleseed bought its stake because its managers believed "gold was undervalued, and we still do, which is why we continue to own it," Strauss says.

A weakened dollar is gold's best friend. Assuming the price doesn't fall significantly below $900, "then we will start heading up again, and if we can get firmly above $1,000, I think we could run anywhere between $1,200 and $1,500" an ounce, says Mark Arbeter, the chief technical strategist for Standard & Poor's.

"Of course, some of this has to do with the action of the stock market," he adds. "The weaker the Stock Market is, the better gold will perform."

Answer 2

I would say the price of gold fluctuates because the buyers that want gold are buying up gold fast, meaning the buyers are going to pay alot for them, and that the

seller realizes that the buyer is paying more for them than in the past, they sell. As long as the price of gold stops increasing, only the willing buyers will sell first, those that need the money now or thinking that the the sellers will be gone if he doesn't sell now. The increase in price is many times short-lived. Some sellees try to figure out the highest price that a seller is willijg to pay, and aims for the best moment. He increases the price of his gold. Think of it as this, you have 100 bricks piles up.vertically with each one being more expensive than the one sold before it. Once the cheap ones are sold and everyone ia sellijg for more expensively, then the price of gold goes up.

Answer 3

Gold is considered by its fans to be the ultimate store of value - an asset with no liabilities attached to it. The price of gold rises when an increasing number of investors lose confidence in paper assets, particularly currencies. As such, gold can be seen as barometer of confidence in the ability of central bankers to pursue sensible policies, or in governments being fiscally responsible.

As David Einhorn, a talented hedge fund manager, said in a recent speech:

I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker's austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.