Gold Price Analysis in India

Gold

Have you been going back and forth about gold prices? Well, today it is this, and tomorrow it’s that. Analyzing hold prices is quite a big deal – isn’t it? Especially for the people who are looking forward to broadening their portfolio with gold. Let’s have a brief analysis of gold prices and make sure you get all the answers you need.

The Gold Rate Trend in India

The study of the gold rate trend in India may provide insight into future fluctuations, allowing investment plans to be made accordingly. The gold rate is affected by a variety of factors, including the central bank’s stability, the supply and demand for gold in the market, quantitative easing, government reserves, the health of the jewelry industry, and overall yearly production, to name a few.

Does the Gold Price Fluctuate Every day?

Well, yes. Almost every day – gold prices change. The everyday change in gold price is because of various reasons, political and economic factors that happen all around the world. Moreover, in India, gold is traded at the MCX Multi Commodity Exchange – where the rates change every second of the market hours. The closing rate of the previous day is fixed as the purchase price of gold in the local markets of the day.

Also, during festival seasons, such as – Diwali, Dussehra, and marriage seasons, there is high consumption of gold. During this, in the local markets, the price of gold shoots up. 

For instance, if you buy gold from the Chennai Market during Sankranti – or check the Chennai gold rate live today, you will find out that the price of gold has drastically gone up than it was a few days ago. This is because in Chennai or south India, it is believed that Sankranti is an auspicious day to buy gold, and the consumption of gold in that area will go up. By this, the price of gold would also go up.

Who Decides the Prices of Gold?

Typically, the price of an asset class is determined by its demand and supply. This phenomenon is not unique to gold. However, the price of gold is heavily influenced by other important factors, such as RBI.

Since its ability to support national currencies, gold is regarded as an important reserve for any central bank worldwide. For example – the Reserve Bank of India backs all banknotes with gold.

When a country exports gold and maintains large gold reserves, it automatically helps to strengthen its currency. Countries with low gold reserves or those seen importing more gold may see their currency devalue over time.

This explains why the Indian government recently increased gold import duties from 10.75% to 15% in order to stifle an increase in gold imports that was putting pressure on the country’s current account deficit. By making gold purchases more expensive, gold imports could be reduced, preserving the foreign reserve.

In general – when a central bank or government purchases more gold, its price rises. Gold prices in the home country may fall as a result of exports.

What Influences the Price of Gold

There are several factors that influence the rise in the price of gold. We will investigate the following:

  • The price of gold is affected by the demand for it. Gold is bought for auspicious purposes. When there is a wedding, festival, or other festive event, people tend to buy gold. As a result, the greater the demand for gold, the greater its value.
  • Domestic gold prices in India are also influenced by political factors and government policy. Similarly, any political event or major economic change that has a global impact can cause the price of gold to rise or fall.
  • The value of gold is also determined by the movement of global markets. Precious metal is regarded as a safe haven for investors because it is less volatile. This means that when the price of oil and the dollar, both of which are considered riskier and more volatile assets, falls, the price of gold rises.

What Keeps the Demand for Gold High

When demand for gold increases, so do its prices. There are two ways for gold demand to rise:

a) Investments

ETF houses around the world purchase gold to meet the needs of their investing clients, which drives investment demand. According to Gold.org’s Q1 2022 Gold Demand Trends report, gold ETFs had their highest quarterly inflows since Q3 2020, fueled by safe-haven demand. Holdings increased by 269 trillion, more than reversing the annual net outflow of 174 trillion from 2021.

b) Industrial

Electronic and medical device producers, who require gold for production, drive industrial demand. Gold’s price is likely to fall when demand falls.

c) Household

Gold jewelry and other physical forms of gold purchases, such as bars and coins, fuel household demand for gold. India is one of the top physical gold purchasers. When demand falls, supply rises, lowering the price of gold.

How to Start Investments with Gold?

Gold is traditionally invested in Manipur in the form of jewelry, coins, and bars. However, new gold investment channels have recently opened up, providing investors with new ways to trade gold. If you want to invest in gold for the long term, here are some of the most popular options:

  • Gold mutual funds – You can invest in mutual funds that hold units in other gold-related funds, such as a fund of funds (FOF). Alternatively, you can invest in a fund that owns stocks in gold companies that are publicly traded on global stock exchanges.
  • Gold coins, bars, and biscuits – Gold coins, bars, and biscuits can be used to invest in gold. Gold coins of various weights can be purchased from a bank or a certified jewelry dealer.
  • ETFs for gold – You can invest in gold by purchasing Exchange Traded Funds (ETFs) (ETFs). Because gold ETFs are traded on the stock exchange, they are simple to buy and sell. Because these are stored in electronic form, the risk of theft is eliminated.

Conclusion

There are a lot of attributes that influence the price of old. Also, when we look back the road of gold’s legacy – we can strongly say that the price of gold dropping is quite rare. When you step into the world of investments in specific, you can say gold is one of the safest ways to get you going forward. As a pro-tip, it’s also one of the best tools to play as a hedge against gold.

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