Rising gold prices are a topic that always attracts attention, especially for those of you who want to maintain the value of your wealth amidst economic uncertainty. The phenomenon of rising gold prices does not just happen for a moment, but has become a trend in recent years.
Interestingly, even though the price continues to increase, demand for this precious metal remains high, and is even increasingly sought after by people from various circles. Why does this happen? Read more in this article.
Why is the price of gold rising but still sought after?
The phenomenon of gold prices rising but still being in demand is very interesting to discuss. Many people may wonder what the reasons are behind the continued increase in gold prices, and why people still choose gold as their main investment instrument.
To answer this question, let’s discuss the main factors that influence the price of gold and the reasons why this precious metal remains a favorite in the investment world.
1. Demand and Supply of Gold Continues to Increase
Market demand is the number one reason gold prices rise. This demand comes from various sectors, from jewelry, investment, to industry. High demand which is not accompanied by a stable supply means that the price of gold will automatically rise. In Indonesia, demand for gold will experience a significant spike in 2025, even though the price per gram can be said to be quite high.
2. Global Economic and Geopolitical Uncertainty
Economic uncertainty, whether due to geopolitical conflicts, recessions or financial crises, has made gold a safe haven asset that many people are looking for. When the global situation is uncertain, investors tend to shift their assets to gold which is considered more stable and safe. This is why the price of gold rises significantly when there is political or economic turmoil in the world.
3. Influence of Monetary Policy and the US Dollar Exchange Rate
Monetary policy, especially changes in interest rates by the United States central bank (The Fed), greatly influences the price of gold. When interest rates fall, gold becomes more attractive because it does not provide returns like bonds.
Apart from that, the US Dollar exchange rate also plays a big role. If the dollar weakens, the price of gold tends to rise because it becomes cheaper for foreign investors. However, under certain conditions, the price of gold will still rise if global demand is very high, even though the dollar is strengthening.
4. Inflation and Currency Weakening
High inflation causes the value of the currency to decrease. Many people end up choosing gold as a hedging instrument so that their wealth is not eroded by inflation. This is because gold is considered to have a stable intrinsic value and is not easily affected by currency fluctuations.
5. Innovation and Ease of Access to Gold Investment
Technological developments and innovation in the financial sector are making it easier for people to invest in gold, especially the younger generation. Now, you can buy gold digitally via various platforms, without having to bother storing physical gold. This makes gold investment increasingly attractive and demand continues to increase.
Main Factors: Gold Prices Rise and Still Being Hunted
After understanding the big picture, here is an in-depth explanation of the main factors that make gold prices rise but are still sought after by the public:
1. Gold as a Safe Haven Asset
Gold is known as a safe haven asset, namely an asset that tends to be stable and safe when economic uncertainty or political turmoil occurs. When the stock market or other investment instruments experience high volatility, investors will seek protection by buying gold. This is the main reason why gold prices rise when the world is uncertain, and why gold is still sought after even though it is expensive.
2. Consistent and Growing Demand
Demand for gold does not only come from investors, but also from the jewelry industry and technology sector. In Indonesia, demand for gold will even increase sharply in 2025, both for investment and jewelry. This surge in demand has also pushed gold prices to rise consistently. In fact, the millennial generation and Gen Z are now starting to look at gold as part of their asset diversification.
3. Protection of wealth value from inflation
Another reason why interest in gold is still very high is to protect wealth assets against inflation. When inflation is high, the value of cash will tend to decrease, while gold remains stable or even increases. By investing in gold, you can maintain your purchasing power and wealth from the risk of currency depreciation.
4. Government Support and Industrial Innovation
The Indonesian government together with the OJK continue to encourage innovation in the gold sector, such as the development of a Gold Bank with a custodian system for digital gold. This makes it easier for people to access gold as a form of investment, both physical and digital. This innovation also increases people’s confidence in investing in gold in the long term.
5. Prediction of Gold Price Increases in the Future
Many well-known analysts and financial institutions predict that gold prices will continue to rise in the future, especially if global uncertainty remains high and world central banks continue to buy gold as foreign exchange reserves. This prediction makes many people more confident to buy gold now before the price rises even higher.
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So, rising gold prices are not a reason for people not to buy this precious metal, especially when talking about investment. Because the high selling price means gold can be used as a practical solution for those of you who need urgent funds, such as capital for a business.
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