In this article, I have clear your questions about why gold prices gaining while share market falling. Price increase with demand. If demands increase then the price will automatically go up.
This is not only when gold prices going up and stock prices going down. it could be share market gaining and gold price falling.
Stocks price falling for economic slowdown. As economic slowdown impacts business growth & profit then valuations of the companies falling. Investors sell stocks and exit from the market. then share market fall.
In that time investor shift their money to gold because gold investments are securely invested than share markets. and gold prices going upward and share price falling.
Similarly, stocks price going upward for economic growth and stability. economic growth and stability are the keys to Companies’ growth and profit. When the Economy is Growing then companies business and profit will also grow up. when companies profit growing up then the valuation of the company also going up. investor invest their money in the share market because the stock price is attractive as per Company valuations then share price going upward.
In this time gold prices fall because investors see better growth and future in Share Market. and shift money gold investment to the stock market.
When stocks market crash then foreign investor exit from share market. Exchange Local currency to Doller. As dollar demand created. Doller prices will go up and local currency will devaluate. In this situation, gold prices will increase Because of currency devaluation.
Market Uncertainty, low investor confidence. Institutional investors exit from the stocks market and invest in gold because the gold investment is always safer than stocks, bonds.
So one question came to your mind that share price will always archive new high in future because of market growth, growth of the economy, and expansion of multiple things.so this means gold price will fall gradually? My answer is No. Gold prices will rise day by day growing with the economy. Because in the growing economy people will spend money on buying gold. So that demand will increase and the price will automatically increase.
But if suddenly falling or gaining of the market that impact on gold.
Maybe you have seen in the past, the gold value was too less. And share & gold value both are increased in current time. In the future, the same thing will be going on day by day.
Gold investment safer than the stock market. so generally Stocks & gold price relations are Not proportional to each other. But If the economic situation worsens than rather than gold, Cash is safer.
In the long term, both values will increase with the growing economy. suddenly up-down of the market may affect the value of gold and share.
but in the long term share price will rise gradually and the gold prices will not fall. because of the rising of the economy people has more money to spend on the gold.
it’s all about demand and supply chain. the price will rise if demand is created and supply is not increasing equally. and the price will fall if the demand is not decreasing and the supply is not decreasing.
This is why when the global market stops because of coronavirus, and demand for crude oil prices decreased and supply was decreased equally. that’s why crude oil price was falling.
to maintain the crude oil price, most of the country stop the production of crude oil. and later the price was rise a little bit because of deceasing the supply chain.
*Read Related Post for More information.