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Top 5 Factors Affecting Gold Prices in USA

Gold bullion vs Gold StockGold prices in the USA are dependent upon several factors including the production of gold, supply of gold, demand of gold and the overall economy of the country. The USA is also a major producer of gold worldwide. Gold prices in USA have seen a major hike of about 16% in the first few months of the year 2016 with the current standing at 1235 US Dollars per ounce.


Factors affecting the Gold Prices in the USA

There are several factors that play a role in affecting the gold prices in the USA. Let’s have a detailed look at the major factors.

Production of Gold

The world produces about 2500 metric tons of gold per year against the supply of about 165,000 tons annually. The USA produces about 240 tons of gold annually which makes it the third largest gold producer behind China and Australia. The gold production is inversely proportional to the gold prices in the USA, if the annual production is healthy the gold prices will decrease and if the gold production is low then the gold prices will see a hike.


The country’s economy affects almost all the assets including gold. If the economy is good the gold prices either remain constant or go down, otherwise, the gold prices go up. This is because in the time of crises the investors put their money on gold rather than investing in the market. We can take the example of Recession 2008, when investors invested heavily in the gold between the years 2009-2011. In first few months of the 2016, fear of recession in USA has forced investors to invest in gold and so it raised the gold prices in USA.

Industrial Demand

This is another major determinant of the gold prices in the USA. If the demand in the production industries is high, the gold prices go up and vice versa. Remember that it is not only the markets in USA that decide the gold prices in the USA, but the industries all over the world affect the gold prices. Gold is used in the manufacturing of the electronics products as it is a very good conductor of the electricity.

Central Bank Reserves

Central banks are authorized to hold the gold; if the central bank reserves are healthy the gold prices remain steady. In the case of crises in the central bank reserves, the gold prices in USA see a major hike. Currently USA central bank is holding gold reserves of 8133.5 tones of reserves.


Inflation is often driven by a rising supply of money. Gold prices in USA and worldwide form together a direct relation with the inflation. It means that if the inflation is high the gold prices will be high as well and vice versa. Investors use gold as hedge against the inflation. Inflation has a direct relationship with the gold prices in USA. A current inflation rate of United States is 0.9 %.


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