Precious metals definition
Precious metals spot gold and spot silver have the functions of value-added and hedging. The transactions are all over the world, with daily trading volume of more than 1 trillion US dollars. It is one of the most popular trading varieties on the market and is also known as the world's largest stock. However, no institution or consortium has sufficient financial strength to control this huge market, and its open and transparent trading model is well recognized by investors.
The impact of the US dollar
Precious metals are quoted in US dollars, and investors generally use gold as an alternative investment product for the US dollar. Therefore, they have a relatively negative correlation. Generally, the price of gold goes up and the US dollar will fall.
Events such as war, geopolitical tensions, and economic crises will cause safe-haven demand in the market, thereby increasing safe-haven buying of precious metals and supporting their price increases.
Supply and demand
Any commodity is affected by the relationship between supply and demand. If the supply of precious metals exceeds demand, the price will fall, and if the supply exceeds demand, the price will rise.