The price of gold is significantly affected by the international markets. Since India is one of the largest importers of gold, any kind of fluctuation in its prices globally has a huge impact on its prices in India. Understanding trends in gold prices is important before you use gold assets for investment or for taking a loan. Doing so you can gauge the potential of your assets and decide when to buy gold or take a loan. Below are some of the important factors that determine the current rate of gold today.
1. Inflation
Gold holds significant value, which is why many investors choose to invest in it. When inflation is high, the demand for gold increases and vice versa. When the demand is high the price of gold will increase.
2. Global Movement
If there is any global movement in the price of gold, it will also affect its price in India. This happens because India imports gold, and when the import prices change, it is reflected in the prices of gold. A political upheaval may lead to a change in the value of currency and various financial products, but in the case of gold, things are different. It is seen as a safe investment and is also known as a crisis commodity.
3. Jewellery Market
Indians love buying gold jewellery on all kinds of occasions. It can be festivals, birthdays, or weddings, gold jewellery holds a special place in every Indian household. Gold prices go up during the wedding season as well as festivals like Diwali due to increased consumer demand.
Gold is not just used in jewellery. Various electronic companies also need it to manufacture devices like televisions, computers, GPS, etc. Many people also use gold as a strong hedge against rising inflation. Due to this, the domestic demand for gold rises time and again leading to huge quantities of import of gold. 12% of the total demand for gold is industrial demand.
4. Exchange rates
Gold is priced in US dollars globally, so if there are any fluctuations in the Indian rupee-US dollar exchange rates, they can affect the gold rate. If the value of INR falls against the US dollar, it could lead to higher gold prices in India, whereas a stronger rupee’s effect can be the opposite. So, it is important to track currency movement to monitor the gold rate.
5. Government policies and regulations
Government policies can significantly impact the gold rate. If there are any changes in the import duties, restrictions or taxes, on gold imports it can lead to fluctuations in the gold rate. The gold rate can be influenced if government policies related to inflation change. Hence, it is essential to stay updated on government announcements and policies.
Determining the value of gold is especially significant for those considering taking a gold loan in India. To take a gold jewel loan interest rate and the tenure for repayment.
