Three reasons for the record rise in gold prices
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Increased investor demand: The atmosphere of economic uncertainty has led investors to turn to gold as a ‘safe haven’ asset. With unpredictable stock markets and low-interest rates, gold offers a more stable investment.
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Supply constraints: The COVID-19 pandemic has caused many gold mines to reduce their production, triggering a decrease in supply. Consequently, the price has increased to match the limited availability.
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Weakness of the US dollar: Gold is priced in US dollars. If the value of the dollar decreases, the value of gold in turn increases. Recent instabilities in the dollar have thus contributed to the rise of gold prices.
And the one reason they are falling
Rising bond yields: Increased bond yields have made bonds an attractive alternative to gold. As these yields rise, investors may turn towards bonds, leading to a decrease in demand for gold and subsequent reduction in its price.
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