The Price of Gold

The Price of Gold is often a contrary indicator. It tends to move in the opposite trend from that of the stock market. This occurs because gold is a traditional hedge against inflation. When the threat of inflation is present, many investors move to "hard assets" as protection against a decline in the value of the dollar and dollar-based assets like stocks and bonds.

Many other factors can influence gold prices. These include commercial demand for gold, as well as political instability in other parts of the world. By itself, gold is not a particularly reliable market indicator. Nevertheless, serious investors should always factor the "message from the gold market" into their overall market trend analysis.

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