Almost 2500 years ago Lydian king Croesus was the first to release standardized gold coins. These coins were of the same size and value, and could be used to buy goods or services. Nowadays gold is used for several purposes:
As a jewelry (about 54% of gold demand. India, China and USA are the largest consumers)
As an investment tool (investing in gold coins, bars or other items. Or investing in gold stocks)
For electronics (electronic components which are made with gold are highly reliable)
As sports award (the highest award in sports)
For medicine (for medical devices, beauty treatment and etc.)
However, gold prices fluctuate over time. There are several main factors that drive the price of the gold:
Breaking news. Announcement of the unemployment figures in the US, rumors about major changes in the world economy always affect the price of gold.
Higher costs of gold mining. However, recent studies showed that there is no empirical evidence that there is a relationship between gold prices fluctuations and costs of gold mining.
Devaluation of USD. US dollar is the world reserve currency. Any changes in the value of USD, reflects in the fluctuations of gold prices.
Price manipulations. Central banks, huge investment companies or banks are responsible for frequent changes in the price of gold. Actions of these participants cause the price movements of gold to the extent of double-digit changes. The Gold Anti-Trust Action (GATA) committee constantly accentuates that gold prices are illicitly inhibited.
Supply and demand of gold. Nowadays many experts agree that there is not enough gold in the market and it is hard to maintain the increasing demand of this expensive metal.
Inflation. Investors use gold to hedge against inflation when their country is facing high levels of inflation. Also gold has better possibilities to keep more value than other forms of currencies.
