Gold is considered a category of precious metal because of its relatively high rarity. Due to its valuable nature and widespread use throughout the world, gold is valued universally almost equally between places or countries.
In the past, gold was used as bartering currency for daily necessities. However, its shape and weight made gold difficult to carry in large quantities. To that end, central banks then based their currency printing on the gold deposits in their vaults.
Other than its past function and characteristics, gold is also considered a safe haven asset because its value will remain the same over time. Regarding the characteristics of gold as a safe haven asset, gold prices move relatively in line with changes in global risk sentiment.
Fundamental Drivers of The Gold Market
Gold has the characteristics of a safe haven asset, so that any price changes will be interminably linked to changes in global or economic risks. The higher the risk, both global, economic, and other aspects, the higher the price of gold, because people will seek refuge in gold assets. Gold will not lose its value due to higher risk, so its value will be maintained so that its price will always increase against any currency in the world.
Economic risk comes from a country’s various economic conditions, such as growth or central bank meetings and the views on these conditions. Meanwhile, global risks could come in any form, such as wars between countries, diseases, disasters, and other factors that could cause disruption to human society and the economy of a country.
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