The gold market is unique for a variety of reasons. Gold has been a store of wealth throughout human history. It has functioned as a currency and remains an important component of central bank reserves. It acts as a hedge against systemic financial risks. For these reasons, we don’t see gold as a commodity, but as a financial asset.
As a financial asset, the price is driven by currency and interest rate movements, government policies and threats to the financial system. The price is determined in the financial markets centered in London, New York and to a lesser degree, Shanghai/Tokyo where the vast majority of trading volume takes place. A much smaller volume of trading occurs in the physical markets for bars, coins, jewelry, recycled scrap and mined gold. While the physical markets are important, they are secondary to financial markets as a price driver.
Gold Price
Get the latest news & insights from MarketVector
Get the newsletterRelated:
