Gold Rate in Andhra Pradesh Today1,56,240

The price of gold is set by whom?

Rather than the supply and demand for actual gold, trading activity in the London Over-the-Counter (OTC) spot gold market and the COMEX gold futures market has a greater impact on gold prices. The prices set by the London and New York paper gold exchanges are typically mirrored by other markets, such as the Shanghai Gold Exchange (SGE) and Multi Commodity Exchange (MCX). The price of gold can also be significantly influenced by central bank policies, currency movements, and international economic and political events.

Image Courtsey - Economic Times

Given that gold is generally thought of as a more reliable store of wealth than cryptocurrencies, which are notoriously prone to speculation, this represents an uncommon reversal. Only twice since Bitcoin was created 17 years ago has gold experienced greater volatility, most recently in May of last year during a spike in trade tensions brought on by US President Donald Trump's tariff threats. The spike in volatility comes after gold saw its largest decline in over ten years, marking a sharp reversal of a rise that some traders claimed had gone too far, too quickly. After reaching a top of around $5,600 last week, prices dropped as much as 10% on Monday, momentarily falling to almost $4,400 an ounce in Asian trading.

Even experienced market participants were taken aback by the record highs that precious metals reached due to economic uncertainties. As investors piled in on fresh worries about geopolitical risks, currency devaluation, and the independence of the Federal Reserve, an already raging rise significantly accelerated at the beginning of the year. More froth was created by a surge of purchases from Chinese speculators. The same forces have not worked in favor of Bitcoin. Following a selloff over the weekend, the token fell to a 10-month low on Monday, continuing a decline of over 40% since its October peak. Gold is currently the wilder ride because Bitcoin has not seen any money shift away from precious metals despite geopolitical tension, dollar weakness, and strong metals fluctuations.