The price of gold is influenced by a variety of factors. Now, let's examine what supply and demand are. The main factor driving the gold price is demand versus supply. That is, the current ratio of the amount of gold available to the amount of demand. Nonetheless, the government has now released regulations regarding the verification of physical gold prior to its sale or exchange. What is the importance of verifying physical gold before selling or exchanging it.

Another time when gold prices surge is following a stock market crash. Gold acts as a safe haven during times of financial uncertainty - especially in times of economic crises, stock market drops and governmental uncertainty. Therefore, the price of gold often goes up. Investors frequently choose to put their money into a safe asset like gold rather than shares when stock markets are declining. Gold as a Secure Environment.

This happened after the 2025 financial crisis when the stock markets fell sharply, lhub.to causing demand for gold to increase. Gold prices are also affected by how much gold is being mined at the moment. This is why the supply of gold can be erratic as miners wait to see if prices will continue to rise. When the markets crash, investors often turn to gold as an asset that offers better security than stocks. New mining technologies and operations allow companies to extract more gold from rocks and so production continues to increase.

It's important to note though, that central banks hold large quantities of gold as an emergency reserve currency so are not likely to sell off large volumes without serious reason. Central bank reserves can affect the price of gold - especially when they sell or buy large amounts. They see the yellow metal as a better place to park their money and so there is more demand for the precious metal. For example, the central bank of India sold large amounts of gold to raise funds for developing infrastructure but this happened only once (in 2012).

Central Bank Reserves. Rising interest rates can sometimes slow down inflation but also reduce the demand for gold, which can cause its price to fall. On the other hand, lower interest rates can also decrease the value of currencies as it becomes easier for people to borrow money. If prices are increasing quickly, inflation will be higher - and this will have an effect on the price of gold. The Fed normally attempts to manage inflation by raising interest rates (which makes borrowing money more expensive).

This can lead to a fall in the price of gold.