Question

In: Economics

Microeconomic Gold between 2015-2019 Explain what has happened to prices of the gold between 2015-2019 over...

Microeconomic

Gold between 2015-2019

Explain what has happened to prices of the gold between 2015-2019 over the time period stated:

  • Use the model of supply and demand and provide a textual and diagrammatic explanation, using the supply and demand curves for the changes in the prices of the gold between 2015-2019
  • Explain the elasticity of supply and demand of the gold between 2015-2019
  • Discover and describe the market structure of the gold between 2015- 2019 and specifically if there are any cartels/price fixing activities in the industry effecting the price changes discussed

Solutions

Expert Solution

Global demand for gold in 2019 will rise to the highest in four years as higher consumption by jewellers offsets a fall in purchases by central banks.

The world will consume 4,370 tonnes of gold this year, the most since 2015 and up slightly from 4,364 tonnes in 2018.

Higher interest rates hurt gold because they make bullion, which pays no yield, less attractive to investors, while a stronger dollar can depress demand by making gold more expensive for buyers with other currencies.

Elastic demand or supply curves indicate that quantity demanded or supplied respond to price changes in a greater than proportional manner.

The structure of the gold market is facing an unprecedented wave of change resulting from evolving gold demand patterns, regulatory change, new types of participants and innovation. How individual gold market centres respond to these opportunities and potential threats will shape the gold trading landscape over the next decade and beyond.


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