There are two main factors when it comes to the price of gold. Supply and Demand is the major one, the amount of precious metal being produced vs. consumed. However, the other factor that is less thought about is the other major influence on gold prices the is the strength of the US Dollar. When the US Dollar becomes stronger in reference to other currencies and commodities (such as gold), those items appear to decrease in value. This is not the case, the only thing that has occurred is that the US Dollar has more buying power. For the most part, the strengthening or weakening of the US Dollar has the same or similar affect on all commodities including gold.
What we have seen in recent months is the dollar strengthening significantly. This has appeared to make gold go down. However, consider this another way. If the dollar gets stronger, the gold value still in your jewelry simply has more buying power. So while it appears that you may get slightly less for your jewelry, those dollars you do get go further.
Of course this is not clearly seen in all cases. For instance, your rent or house value won’t change – changes in the valuation of the dollar take a long time to make it to the consumer for these types of items. But there are immediate signs of the strengthening dollar. When gas goes down at the pump as a result of the stronger dollar, it simply means our dollar can buy more gas (and indirectly your gold jewelry). Groceries will tend to come down in price too (although more slowly than gas) – as it simply costs less to produce them, trucks spend less money on fuel to deliver them.
Kitco.com does a great job showing the two major influences separately. http://www.kitco.com/kitco-gold-index.html?utm_source=kitco&utm_medium=banner&utm_content=20110215_KGX_tb1&utm_campaign=KGX