Why Gold Prices are Fluctuating

Expect higher silver and gold prices next week. The volatility of gold prices has increased three-fold in the last year. This means I can buy one third the amount of gold to realize my profit objective or meet my stop-loss. Gold prices have gone up not due to high demand, but because of other economic factors, including weakness of the dollar, rising price of oil and speculation. Sales have definitely been impacted.

When that happened gold prices unexpectedly collapsed 100 dollars in 3 days. The reason was that investors in the metal were disappointed and the markets were actually looking for a 100 basis points cut. That means the 20 percent increase in international gold prices translates to a much smaller increase in the value of your necklace. The markup is less significant overseas, where many people do consider gold jewelry an investment. After oil and gold prices reached new highs, or the peak of their cycles, investors shifted to commodities because their prices are seen to be in the middle of their cycle. In short, these products have the potential to rise further.

Gold prices started rising two years back and gradually people have accepted high prices. In the last six months the price of gold increased more than 50 per cent, so whoever bought gold before that gained from the price increase. Gold: Gold prices soared to a record high $1,007.40 per ounce on Friday as the dollar slumped to record lows versus the euro. Gold has risen by about 17 percent so far this year, underscored also by supply problems in South Africa, the world's largest producer. The question that arises now: What will be the outlook for gold prices? When the US Fed cut the rate by 75 basis points, it was expected that the market would move up.

The recent run-up in gold prices, to more than $1,000 an ounce, coincided with unhappy times in the stock market. StreetTracks Gold Trust, an exchange-traded fund that tracks the price of gold, is up 42 percent in the last 12 months.