7th grade math

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"1. Supply and Demand The basic economic principle of supply and demand is a major influencer of all commodity prices. When gold demand is high and supplies of the precious metal are low, gold prices will rise. In the opposite scenario of high supply and low demand, prices decrease. Since gold is finite, supplies will always be limited. By some analysts’ measure, the world reached peak gold years ago, so production levels will only continue to decline. Gold demand from investors, central banks, and the medical and technology sectors, however, remains strong. 2. Market Conditions Political and economic events shape market conditions, which in turn influence gold prices. As former Federal Reserve Chairman Ben Bernanke said during the Great Recession, gold prices reflect a nation’s economic health. During that time, gold prices soared, reaching a record high of $1,917.90 an ounce in August 2011. 6 In recent years, political and economic turmoil in Europe has also fueled the purchasing of safe haven assets like gold. 3. Currency Depreciation Currency depreciation occurs when a country’s currency loses value in relation to one or more foreign currencies. Inflation and monetary policy, such as quantitative easing, are two causes of currency depreciation. 7 Inflation is essentially the decrease in purchasing power of a currency over time. For example, between 2005 and 2015, the purchasing power of the dollar decreased by 20 percent. During this time, gold prices increased by over 169 percent. Since gold tends to maintain or appreciate its value and currency is subject to significant losses in purchasing power, investors protect their portfolios with gold. When a nation’s currency is weak, investors turn to gold, increasing demand and prices."