Tag Archives: gold prices

Does CPI Affect the Price of Gold?

Fuel prices are on the rise, the value of chocolate is increasing due to pricing inconsistencies in relation to portion reduction in ratio with consistent attributed shelf pricing. Electricity prices aren’t appearing to let up where your only option for relief is to invest in solar. All of these household items from smaller quantity cans of Coca-Cola through to bread are what comprises the national Consumer Pricing Index commonly referred to as CPI (Martin 2018). But does this directly impact gold prices, and should CPI be a consideration for ‘tapping into’ or ‘cashing out’ of the gold market?

There has been an increase in CPI as was recorded in 2021, and perhaps it’s feasible to consider this before making any financial decisions this year. Hawkins (2022) states that “Australia’s Consumer Price Index rose 1.3% in the three months to December, bringing inflation for the full 2021 year to 3.5%” which shows lower performance in the market for consumers, modifying their purchasing power, and which shouldn’t be taken lightly by them in terms of future financial investments. It’s interesting to note that in the background, there have been substantial changes in gold prices in the last year also, but whether directly or indirectly related to CPI it’s still up in the air. However, when CPI takes into account so many inputs that comprise of commonly purchased consumer products across the broad consumer market, it’s fair to pontificate that these significant fluctuations in average product costs could influence gold prices, especially if you consider them as a consumable in many of your average household products from mobile devices through to circuit boards in your fridges and headphones.

According to Ballard (2022), although the was quite a decline in gold prices (which has been recorded as a trend over the past 3 years), gold trended positively for the remaining period of 2021 (March to December) with the final two months of the years being especially notable, even though the prices were sloping overall over the past three years (with an encouraging emerging trend of the past 9 months) the Perth Mint’s recorded annual sales peaking in comparison to any calendar year in the past 10 years. Ballard (2022) further notes that corrective cycles are indicative of a healthy development in the market. It’s perhaps not illogical to think about the fact that more gold exchanged hands in 2021 than in the past 10 years prior based on this information showing lower pricing for bullion in comparison, but higher annual sales recordings.

Perhaps economic conditions continue to weigh in on consumer thinking which influences gold as being an investment option, or perhaps it’s simply based on consumption of electronic good. In any case, gold continues to show good demand even during these times of higher CPI. And with gold prices continuing to trend more positively then negatively, you’re bound to be able to sell your gold items, whether they’re investment based bullion, or valuables from liquidated estates or jewellery-based assets that no longer satisfy a need they once served.

For more information around gold pricing, or to enquire about market pricing so that you can make sure you’re trading with confidence, contact the team at Brisbane Gold Brokers, we’re here to help, and guarantee the best payouts for your gold items.

 

REFERENCES:

  1. Ballard, H 2022, ‘Gold price set to strengthen after rocky 2021’, Australian Mining, January 26, viewed 27 January 2022, <https://www.australianmining.com.au/news/gold-price-set-to-strengthen-after-rocky-2021/>
  2. Hawkins, J 2022, ‘Inflation hits 3.5%, but one high number won’t budge the Reserve Bank on interest rates’, The Conversation, January 25, viewed 27 January 2022, <https://theconversation.com/inflation-hits-3-5-but-one-high-number-wont-budge-the-reserve-bank-on-interest-rates-175045>
  3. Martin, P 2018, ‘What’s in the CPI and what does it actually measure?’, The Conversation, July 27, viewed 27 January 2022, <https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162>.