ranjan

 Many investors believe that changes in Gold prices can have an impact on the economy. It is typical to note that Gold prices reflects economy rather than causing them. Gold prices reflects changes in the value of Dollars compared to other foreign currencies. In 1792, USA established fixed price of Gold in terms of Dollars. Gold and Silver became the legal tender in USA as the Spanish Rial (a silver coin) of Spanish empire. U.S. mint legally required to buy & sell Gold & Silver at the rate of 15 parts of Silver to 1 part of Gold. When Dollar is strong, it reflects (even if Gold prices remains same) Gold will be expensive in foreign countries whose currencies have declined in value. This tends to cut demand and put pressure on Gold prices pushing them down in Dollar terms. The opposite is true when Dollar weakens, because of falling prices in foreign currency makes Gold cheaper to purchase, thus raising demand and pushing Gold prices upward. When economy weakens, it draw