Gold’s price is often debatable as it has very limited industrial use, pay no dividends, and cost money to store. Its allure is generated from its scarcity, which used as storage of wealth and hedge against inflation and currency depreciations. Rather, on a practical side, its real value is support by retail demand as jewellery.
Gold reached all time high in 2011, but had drastically dropped over the last few weeks due to the following reasons:
Gold reached all time high in 2011, but had drastically dropped over the last few weeks due to the following reasons:
- Termination of Fed’s quantitative easing program cause investor to reconsider gold as inflation hedge
- Demands for commodities (including gold) is falling due to emerging markets like China and India
- Eurozone crisis had impacted on gold’s value