The scarcity and unique physical characteristics of precious metals such as gold, silver, platinum and palladium makes their acquisition much more difficult. This rareness of precious metals makes them exceptionally sought-after. Throughout human history their exclusivity in comparison to the abundance of base metals has made gold, silver and other precious metals alike a highly profitable asset. The flexible nature of precious metals has made them greatly applicable in various domains such as jewelry, dentistry and digital technology,
All the same, the primary function of precious metals is to serve as a store of value and investement at times of global uncertainty.
One of the main factors contributing to fluctuating prices in precious metals is the supply and demand relationship. Due to the physical limitations of obtaining more gold and silver the supply remains more or less stable hence demand plays bigger impact on prices. As more precious metals are demanded the higher the prices go.
A reason why demand for precious metals would go up is when market economies begin to struggle. The proven value and positive purchasing power of precious metals makes them a safe haven in volatile times. Gold as one of the most important precious metals is universally recognized as a symbol of wealth which gives investors some veneer of security. On the other hand, a strong global economy drives prices of precious metals down.
In case of inflation and currency devaluation which impacts the purchasing power of given currency investors tend to turn to gold and other precious metals for their security and proven worth over time. Precious metals are viewed as a safe way to keep general wealth when buying power is unstable.
Lastly, the practical applications of precious metals in medicine, electronics and dentistry also makes them highly useful and in turn affects their price.