Gold is often perceived as always having high value and being one of the safest long-term investments. But like every natural resource on the planet, the market value fluctuates almost daily, depending on global trends and economic news. Investing in gold jewelry is widely considered safe and practical for storing value. Before rushing out to buy gold jewelry, it's helpful to know factors that affect the price of gold.

What Affects the Price of Gold?

The market price of gold is just one of various factors that affects the value of gold jewelry. Other factors are rated by professional GIA-certified gemologists. It's important to note that not all jewelers around the world possess this certification that signals industry credibility. For the most accurate gold jewelry evaluations, it's best to work with a jeweler who is certified by The Gemological Institute of America.

Two of the biggest factors that affect the price of gold are demand and the amount in circulation. When gold mining production slows down, it can increase demand and push prices higher. Some of the top places where gold is extracted include China, Russia, the United States, Australia, and South Africa. The deeper miners have to dig, the more the cost rises.

Keep in mind, the official "spot price of gold" is the core benchmark for measuring the underlying current value of the commodity. The largest source for gold commodities trading volume is the COMEX, a dvision of the New York Merchantile Exchange. From there, it's a very complex puzzle how gold prices are set on a daily basis, but it relates closely with the volume of gold being traded.

Gold Jewelry Prices vs Gold Commodities Prices

Collecting data on gold futures trading is still not enough information to evaluate the price of gold jewelry. One of the most crucial factors that determines the value of gold merchandise is the purity of the precious metal. This purity is measured by karat weight, indicated by karat number on the piece. This number has been stamped on jewelry since 1980. A certified gemologist can identify karat weight and tell you if an item is gold plated or completely authentic.

Active investors are more likely to keep up with the daily global spot price of gold, whereas passive investors include a wide range of consumers who don't follow broad market prices. If you want to explore more deeply the origin of gold prices on the commodities market, look into London Gold Fix. One way to check the current price of gold per ounce is to visit a financial website that publishes market data, such as GoldPrice.com. The index called XAU indicates the current global spot price of gold.

How Safe Is Gold as an Investment?

Since the early 1970s when the United States discontinued the gold standard, the price of gold has grown exponentially by 30 times. Much of this growth has been in the 21st century.

According to the World Gold Council, gold jewelry represented about half of gold demand in 2019. That alone should tell you how important the precious metal is to jewelry collectors. Gold attracts both active and passive investors. Passive investors are more likely to be jewelry consumers who care more about wearing than selling gold pieces.

Conclusion

The perception of gold as a continuous store of value and wealth persists around the world. The forces of supply and demand ensure that the scarcity of gold maintain a value much higher than last century. Contact us at Ralph Mueller & Associaties for more information on how the price of gold affects the value of jewelry.