DUBAI GOLD: UNDERSTANDING WHAT DRIVES THE GOLD PRICE - Goldy Precious Jewellery Trading LLC, Dubai

DUBAI GOLD | 14 JANUARY 2025

For thousands of years, gold has been used to create ornamental objects like jewellery and artwork. For thousands of years, people have worn or owned it as a sign of riches, power, and status because of its malleability and resistance to tarnish, which make it perfect for jewellery. Even now, this status mark is still powerful. Jewellery is a major source of demand, accounting for around half of all gold mined.

Because of its rarity and immutability, gold has been used as currency for thousands of years in addition to jewellery. Even if it’s no longer utilised to purchase products, it’s still a common long-term investment and value store. The second-highest share of demand for gold is from investment purposes. Exchange-traded funds (ETFs), which enable investors to purchase gold like shares without keeping the real commodity, and physical gold coins and bars together accounted for 254 tonnes of the total investment demand for gold in the second quarter of 2024.

Central banks around the world maintain substantial amounts of gold to diversify their reserves and support financial stability, making it a crucial component of fiscal policy. Like regular and institutional investors, central banks use gold as a hedge against inflation, currency depreciation, and economic disasters.

Gold holdings by central banks support national reserves and preserve trust in monetary systems. International trade is facilitated by gold’s liquidity, which also enhances economic security and financial stability.

The demand for gold is affected by several factors due to its wide range of applications. The most important of these is that gold is a safe haven, which means that it frequently gains value during unstable times. Investors turn to gold in response to war, geopolitical tension, economic crises, or even the threat of such events.

This is true for jewellery buyers who value gold for both its long-term value and aesthetic appeal, as well as for investors and central banks who purchase it for its inherent value. A gold chain always has worth equal to its gold content, even though its design and production expenses make it more expensive than its weight in gold.

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