How the Plummeting Gold price affects the Global Economy


As of November 2015, the gold prices have hit an all-time low of $1,051.60 per ounce. This dropping gold price is creating a cloud of uncertainty amongst investors and business owners as we may be facing the inception of another global crisis. The global crisis of 2008 was mainly caused by the deregulation in the financial industry as well as the ever so fragile real estate industry, 2 key pillars to that hold the global economy. During this shakedown investors usually run to invest in gold so stabilize their financial status - The yellow metal was infamous for holding its value and a safe haven when everything else failed.

The main reasons for the falling price are, the growing US dollar, Majority of the time gold is traded in American dollars, with the dollar value surging, investors are shying away from investing in gold. Another cause for the falling gold price is because of the falling Chinese stock market and its fragile economy. Lastly, favorable political conditions globally such as the Euro-zone deal with Greece as well as the nuclear deal with Iran has also led to the gold price to drown.

In spite of regressed gold prices, analysts forecast that the gold price will recover which will be mainly aided by a strong comeback from the Chinese economy. The Chinese economy is currently suffering only due to a government crackdown on their largest stock brokers. Once the smoke settles China should be back at it in full throttle competing with the United States for goods supply superiority. Another reason the gold price is expected to recover is due to the predicated inflation rise caused by the rising demand for goods and services globally.

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