Factors that Affect the Price of Precious Metals

Investors have long viewed precious metals as a safe haven asset. When economic conditions are poor, we tend to see the price of precious metals rise, and vice versa. Like most commodities, supply and demand also influence the value of precious metals. Here are some of the trends we have found that seem correlate with the price of gold and silver.


When inflation rates increase, the value of our dollar decreases as does many other investment avenues. This can increase the value of gold because it is used as a hedge against inflation and during volatile markets. The value of precious metals are not directly affected by the fluctuation in the value of our currency.

Interest Rates

As economic confidence declines the rates decrease. When this happens, investors turn to precious metals to protect their wealth. This increases the appeal for gold because low interest rates means other investment opportunities are not making any additional income.

Government Policies

Budget decisions, foreign investments, and industry procedures all affect the value of precious metals. Change in these areas impacts the value of the dollar. Many investors will obtain gold when facing the risk of a price collapse. Economic and trade policies contribute to the overall balance of trade affecting the strength of our economy.

Mining Production

Gold is becoming more and more challenging to mine. Once supply is not meeting demand, the asset becomes more valuable as more people are willing to pay for it. Miners are seeing more challenging conditions, meaning it takes longer, costs more, and there are more risks in mining gold. This adds to the costs in production and overall can affect the price of the commodity.

With low risk, and volatility, precious metals are one of the best options to keep a diversified portfolio and get higher returns over time.