Economics

I am going to discuss about the price of gold, review the gold price of the last ten years and explain why the gold price is exceptionally high and low price at certain point of time. I am also going to use the demand and supply curve to illustrate and explain in details. I will also guess the future price of gold base on few logical reasoning. According to the article, India the largest gold user in the world last year had doubled the gold premium to tackle the surge in demand of bullion after it enter a bear market in April 2013. (Pratik, 2013). When gold changes from bull market to bear market the demand decreases and the curve shift inwards, D1 to D2 as shown in fig 2.

Fig 1. Demand Curve Fig 2. Change in Demand

Supply is the amount of product or services that a market has available. When a firm supplies a good or service, it means they have a definite plan to produce and sell and has the resources to produce and can profit from it. Demand is the amount of product or services that a market has available. When someone demands something, it means he wants and have made a definite plan to purchase and can afford it. The relationship of demand and supply has a significant influence on the price of goods and services.

According to the law of demand, price of product and services has a significant effect on demand. When other things remain the same, the higher the price of a good and services, the smaller is the quantity demanded. In contrast, the lower the price of a good and services, the larger is the quantity demanded. When the price of the product and service is too high, people will feel that buying the product will prevent him from being able to afford other, valuable items. In this scenario, the opportunity cost of the item is too higher and the demand for it may be low.

The law of supply states that higher quantities of a good or service are supplied at a higher price. Secondly, the lower the price of a good and...