Elasticity of Gold

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Gold is respected throughout the world for its value. In the early years, golds were own by people to portray their wealth and rank to the society. Early civilization equated golds with gods and rulers and was sought in their name and dedicated to their glorification. However, as time past by, people have continued to own gold for other several reasons.

Reasons why people owns gold :

  • As jewelry.
  • Gold as a medium of exchange and money.
  • Uses of gold in electronics.
  • Uses of gold in dentistry.
  • Uses of gold in aerospace.


Demand Elasticity of Gold 

Gold is very price sensitive good in terms of demand. This means that if the price of gold increases, the demand of consumers for gold decreases and vise versa. Thus we can say that gold demand is elastic.When we say the gold is elastic, a small change in gold price cause a huge change in its demand from consumers, which also affects the total revenue.


Nature of Demand

Gold is a luxury good and not everyone can afford it. Moreover, gold also has its own substitute like silver and platinum. Thus, when a good have several numbers of substitute, the elasticity of demand is elastic as consumers can choose other alternative that buying that particular product. Besides, we can also said that gold is elastic is because gold is not a necessity for consumers.







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