The price of gold is generally inversely related to the value of the United States dollar because the metal is denominated in dollars. All things being equal, a stronger US dollar tends to keep the price of gold lower and more controlled, while a weaker US dollar is likely to push up the price of gold through increased demand (because you can buy more gold when the dollar is weaker). Gold and greenback prices have an inverse relationship. As the dollar strengthens against other currencies, gold prices will fall as they become more expensive in other currencies, reducing demand.
This question has affected many gold speculators, investors and ordinary people interested in what gold can offer them. The price may drop on any given day, simply because there were more gold sellers than there were buyers of gold on the stock exchanges that day. Therefore, gold prices may be affected by the basic theory of supply and demand; as demand for consumer goods, such as jewelry and electronics, increases, the cost of gold may rise. When the price of gold rises dramatically in a short period of time, usually because speculators raise prices beyond their intrinsic value, a gold bubble forms.
