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How do gold dealers decide what to buy and sell for?

The wholesale dealer may purchase gold at a small premium over spot. It is the discrepancy between a dealer's cost from his wholesaler and the selling price he charges the general public. Therefore, the dealer's premium, spread, and direct.me other costs may be included in the dealer markup. The cost that the dealer pays to their wholesaler is also measured by a dealer's spread. Gold can store value but is not consumed, which sets it apart from other commodities. However, there is frequently a difference between the buying and selling prices because the price of gold varies greatly over time.

Another time when gold prices surge is following a stock market crash. When the markets crash, investors often turn to gold as an asset that offers better security than stocks. In times of stock market decline, investors frequently would rather keep their money in a safe asset like gold than in shares. They see the yellow metal as a better place to park their money and so there is more demand for the precious metal. This happened after the 2025 financial crisis when the stock markets fell sharply, causing demand for gold to increase.

Gold prices are also affected by how much gold is being mined at the moment. Therefore, the price of gold often goes up. New mining technologies and operations allow companies to extract more gold from rocks and so production continues to increase. That being said, production costs for new mines are high - with the price of extraction rising every year. Gold acts as a safe haven during times of financial uncertainty - especially in times of economic crises, stock market drops and governmental uncertainty.

Gold as a Secure Environment. For example, the central bank of India sold large amounts of gold to raise funds for developing infrastructure but this happened only once (in 2012). Inflation is a measure of how the general level of prices for goods and services is rising over time. Central Bank Reserves. This is why the supply of gold can be erratic as miners wait to see if prices will continue to rise. If prices are increasing quickly, inflation will be higher - and this will have an effect on the price of gold.

Rising interest rates can sometimes slow down inflation but also reduce the demand for gold, which can cause its price to fall. The Fed normally attempts to manage inflation by raising interest rates (which makes borrowing money more expensive). On the other hand, lower interest rates can also decrease the value of currencies as it becomes easier for people to borrow money. It's important to note though, that central banks hold large quantities of gold as an emergency reserve currency so are not likely to sell off large volumes without serious reason.