Factors Affecting Gold Rate In India

Gold is one metal that has caught the fancy of a lot of people over the years. It has always been a perfect hedge against inflation. Gold in India is available in myriad forms. It can be bought as gold bars, coins, ornaments, and bullion. It can also be bought from banks, jewellers and even dedicated gold loan providers. The demand for gold has increased exponentially over time. Investors are increasingly looking at gold as an important investment option. If you’re looking to invest in gold or to buy gold jewellery for personal use, there are several factors to consider before getting started.

Know About Gold Price:

24 Carat Gold

24 carat gold is a term denotes the purest form of gold where it has been prepared by alloying with other metals in small quantities so that the final chemistry is not altered. 24 carat gold contains only pure hindi metal and gold ions that are free from any impurities. It contains no other metals, the impurities being absent or present in very small quantities. Some main impurities present in most natural gold are silver, copper, lead, zinc and iron.

22 Carat Gold

Pure gold is a beautiful yellow color. It is soft, so it is mixed with other metals to become more durable for jewellery. Pure gold can be very expensive. This 22 carat purity gold is ideal for jewellery making.  It is the combination of 22 parts gold and two parts silver, nickel or any other metal. The mixing of other metals makes gold more stiff and appropriate for jewellery. The 22 carat gold often reflects 91.67 of gold purity.

Top 5 Factors That Affect Gold Rate In India

Several factors affect the prices of gold, and the market for this metal is always fluctuating. The need for physical backing for currency, investment demand and the price of commodities in general all have an impact on Indian Gold prices.

1. Inflation: The price of gold is affected by several factors, both in India and overseas. There are various kinds of gold, including 22 carat gold, 24 carat gold and 18 carat gold. When you buy a piece of jewellery made from metal, you will have to pay for these grades separately. Gold coins continue to be a popular investment option for investors and can provide good returns. While some people still hoard them as an investment, others use them to make jewellery such as rings and bangles for family and friends.

2. Global Movement: The price of gold in India is contingent on several factors. One, the global movement in gold price and two, the value of currency that the same is reflected in the domestic price of gold. The trend has been that the value of gold rises when there is political chaos, as people prefer investing over physical assets like gold instead of risking their money in a government-regulated paper currency. For example, a surge was seen in the demand and prices of gold just before a general election and as such many rich investors bought gold as it was expected that afterward the value of Indian rupee might decrease, which would lead to a surge in prices of commodities, including gold.

3. Cold Reserves by government: Central banks all over the world hold both currency and gold reserves. The US Federal Reserve of the US and Reserve Bank of India are two prime examples of this. Whenever the central banks start acquiring more gold, buying it in large quantities, the price of gold goes up. This is because they are procuring the gold while the cash flow increases in the market.

4. Jewelry Market: India is the second largest consumer of gold in the world. The import of gold into the country shot up to a new all-time-high at 293 tons in 2012-13, nearly 11 times higher than the previous year. The key reason behind it was the high demand for gold by individuals as they were stocking up on bullion amidst one of the worst phases in equity markets ever. Indian households love their gold and with every festival, this demand rises substantially. In Q3 2012-13, gold imports surged to about 80 ton. The rising prices of gold help India’s Exports to climb ahead.

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