Research into Recent Developments in Gold Prices Paper

Into Recent Developments in Gold Prices - Research Paper Example Relating the context of recession to the price changes of gold in the international market, it can be stated that the revitalization of demand for the commodity in the recovery period of 2010-2011 led to the sustained and rapid rise in gold price. With gradually stabilizing demand along with the Customer Price Index (CPI) in major economies including US and UK, the purchase rate of gold also increased which further augmented gold prices to maintain balances in its supply and demand ratios. With reference to the above presented chart, it can be apparently noted that gold price augmented rapidly during the month of August, 2011. For instance, the average gold price was recorded as USD 1572.81 per OZ for the month of July 2011 which increased to USD 1755.81 per OZ in the month of August 2011. It is in this context that gold suppliers intended to foster the reserves of the commodity encouraging production as well as recycling following the recovery of the financial market. Although, a 7% increase in the mine production was witnessed, the recycling activity made negative contribution of 3% in comparison to the previous year. On the similar context, the demand for gold was also rising steeply in the previous quarters of the year, i.e. 971.70 tons in Q1 and 919.80 tons in Q2. Therefore, in order to maintain the balance in the supply of gold having lesser growth rate than the demand, the price of the commodity increased rapidly during the month of August 2011.