A constant issue in the gold market is what influences the price. Most people logically believe the supply and demand figures in the physical gold market will determine the price.
However, the futures market in New York is the single largest place in the world where more gold contracts are traded than any other. The price at which the physical gold changes hands, in almost all cases, depends on the price at the New York exchange. Practically all gold bullion and gold coin dealers will base the price of their transactions on this price.Therefore, the supply and demand at the NY exchange is probably the single most important factor in determining the outlook for the gold price.
Although the indicators are now negative in the short term, the potential still exists for a large rise in the gold price in the longer term, particularly if the U.S. Dollar continues to weaken as it is has recently.
The potential exists for gold to rise well over $1,000, possible as high as $1,500 or even $2,000 or higher if the gold resumes its uptrend. (Under almost similar circumstances in 1979-1980, the price of gold and silver tripled, or more.)
The principal similarities to the markets of 1980 compared to now are that Crude Oil is rising to record prices and the value of the U.S. Dollar declined to record lows. One significant factor so far remains different - interest rates soared in 1979-1980 but that has not been the case up to now
