Financial encyclopedia

Gold topped the record high and its influencing factors.

Gold broke through the top and hit a new high. The price broke through 2195 per ounce, only one step away from the 2200 mark. Will gold continue to rise? Refer to several important key periods and historical highs of gold in the past, and the factors affecting the price of gold:

The dollar broke away from the gold standard (1971)

When the American economy was in a downturn, President Nixon suddenly announced that he would stop the exchange of gold and the dollar, that is, the Nixon shock ended the gold standard.

Floating exchange rate system (1973)

Major developed countries in the world switched to floating exchange rate system, when the dollar depreciated and the price of gold soared to $100 an ounce.

QE quantitative easing policy first appeared (2008)

In 2008, the financial crisis broke out in the United States. In order to save the American economy, the Federal Reserve announced that it would reduce the interest rate to zero, and even pushed QE policy for the first time. The price of gold rose to $1,000 per ounce.

Federal Reserve Policy and European Debt Problem (2011)

In addition to continuous QE, the debt problem in Europe also affected the rise of safe-haven gold to $1,925 per ounce at that time.

COVID-19 Epidemic and Sino-US Trade War (2020)

At the end of 19th century, the global COVID-19 outbreak pushed the price of gold to rise continuously, and with the further deterioration of Sino-US relations in the past 20 years, the price of gold rose to $2,075 per ounce.

Ukrainian-Russian War (2022)

In the tense military relations between Russia and western countries, the demand for hedging in the market has increased greatly, and the price of gold has once again exceeded the $2,000 mark per ounce.

What are the main factors affecting the price of gold?

Economic crisis/war

Gold has traditionally been regarded as a safe haven tool. When there is a war or economic crisis, common investment tools such as stocks will be impacted and funds will flow to gold.

inflation

When inflation is too high, the real income of stocks, bonds or real estate is greatly weakened, and investors tend to transfer some funds into gold to maintain the value of the overall assets.

interest rate

Gold itself is a non-breeding commodity. As long as the interest rate rises, the price of gold will fall. On the contrary, if the interest rate falls, the price of gold as a commodity will rise.