Price Firmness of Gold Essay

Price Firmness of Gold

Price Elasticity of Platinum

Group brand: In-Demand

The general inverse marriage between cost and demand is a essential fundamental in economics. A rise in price may shrink require and vice versa. However , another important factor in economics is the selling price elasticity of demand, that can be interpreted because the percentage difference in demand relative to the percentage change in price. Basic goods tend to be of low elasticity, therefore the change in price offers little effect on demand, although luxury merchandise are usually of high elasticity in which demand varies greatly opposing a small change in prices.

In our examination of the around the world demand for rare metal over the past three years, the trend demonstrates that a decrease in price brings about a reduction in the demand for gold and vice-versa. This kind of shows that consumers are willing to pay additional money00 for platinum than a lower one.

The listed below data and graph describes the price-demand relation of gold over the past 3 years: Quarter – Year| Quantity demanded (in thousand tons)| Selling price ($US bn)| Price Flexibility | Q1 – 08| 13. 4| 450| -

Q2 – 08| 15| 521| 0. 76

Q3 – 08| 18. 8| 672| zero. 87

Q4 – 08| 14| 548| 1 . 38

Q1 – 09| 9. 6| 329| 0. 79

Q2 – 09| 12. 8| 431| 1 . 08

Q3 – 09| 12-15. 1| 490| 1 . thirty-one

Q4 – 09| 18. 1| 511| 4. 64

Q1 – 10| 18. 6| 521| 1 . forty one

Q2 – 10| sixteen. 3| 422| 0. 66

Q3 – 10| 21. 3| 541| 1 . 2009

Q4 – 10| twenty-five. 3| 575| 2 . 99

Price Elasticity: О”Quantity DemandedО”Price X First PriceInitial Variety

Demand shape of precious metal from 08 – 2010 per quarter

Price Flexibility of gold from 2008-2010

Gold, like a luxury merchandise wherein the price elasticity can be high we. e. an increase / decrease in price causes a high change in demand. A few factors impacting on the high elasticity of gold happen to be: * TheВ snob effect: preference for goods because they are not the same as those typically preferred; basically, for consumers who want to make use of exclusive items, priceВ isВ quality...

Sources: http://goldandsilverblog.com/gold-and-silver-etf-holdings-decline-on-week-while-europes-debt-crisis-expands-0279/

http://www.gold.org/media/press_releases/archive/2011/02/global_gold_demand_in_2010_reached_a_10_year_high_in_tonnage_and_all_time_high_in_value/

http://www1.goldtrades.info/index.php/weekly-analysis/gold-price-forecasts

http://www.munknee.com/2010/06/12180/

Paper submitted by:

Arjun C

Kishore Gautam

Meghana Babu

Nisha N Nair

Saravanan L