4. The Production of Gold

Gold is produced from mines located in the entire six continents except Antarctica, where mining is banned. The last five years records show an averaged approximately supply of gold i.e. 2,602.2 tonnes per year from gold mines. This stability of production is primarily resulting from the fact that when new mines were discovered, they’re mostly used for replacing the existing mines production, instead of expanding the current global production levels.

However, this inelastic in production of gold, often fails to meet the rising demand for bullion in the world market. So to keep the demand under control, trader may increase the gold price in 2013.

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5. Central Bank

Central bank of every nation plays a key role in monitoring the price of gold. If the central bank provides a lower rate of interest on deposits, the demand for gold increases which also pushes up its price. As the individuals are discouraged by the lower interest rates of paper currency; they flip towards the golden metallic as it has potential for continued price appreciation, making it a good prevaricate towards inflation.

But if this year central bank decides to offer higher rates of interest, the gold price will fall as this positive rate of interest will compensate for the decline in the value of paper money via inflation.

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