10 Factors That Determines the Price of Gold in India

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Gold jewellery together with gold bullions has constantly been an imperious part of the Indian culture and tradition. The alluring yellow metal has always been associated as a sign of wealth and social stature among Indians, this has always created an undying demand for gold purchase in India. India has constantly been the largest devourer of gold, globally. Bullion India experts analyse the factors affecting gold prices in India.

Jewellery is the centre of Indian weddings and gift-giving norms, undeterred by the price of gold in India or globally. Although, if one is looking to buy gold in India at an attractive price you have to know the factors that influence gold price in India.

  1. Demand for the yellow precious metal plays an important part in influencing the price of gold in India. The wedding seasons and peak gold purchasing times often fluctuate gold rate in India.
  2. Since India does not produce gold, all the precious metal needs to be imported. Thus, gold price in India relies on various import duties, transportation costs and taxes.
  3. The strength of the US dollar is a major contributing factor that influences the gold price in India and globally. When the dollar is weak, the spot price of the yellow famous metal is on the rise; hence, the gold price is negatively correlated with currency.
  4. The gold supply is a deciding factor amongst its capacity to trade, globally. As gold supply faces deficiencies because of exhausting mineral reserves, the prices rise exponentially, affecting indirectly the price of gold in India as well as globally.
  5. Contrastingly, the discovery of new sources of the precious metal adds to the supply, reducing the global rate of gold and hence the gold rate in India.
  6. Introduction or fluctuation of taxes or any Government implemented rules regarding gold can affect the gold prices in India. Higher interest rates highly discourage gold prices.
  7. Gold rate in India is not standard. Prices across the country differ substantially based on proximity to major metropolitans or ports. As gold is imported, the ports and closer metropolitans are favoured by lower costs, over the inland areas that require handling, transportation and added expenditures that indirectly are levied on the gold prices.
  8. Troubles in the mining sector of gold, which occurs due to the high cost of mining the precious metal, often results in slowing down the production, resulting in steeping prices of gold.
  9. Gold is often purchased as a hedge against currency when the currencies weaken more and more, gold is purchased as a backup. This escalates the demand and price of gold in India and across the globe.
  10. The political unrest and the world’s economic conditions along with waging wars, unrest and discord reduces the reliance on currency and increases towards tradable assets like gold and silver. The gold rate in India and the world are influenced by such situations drastically.

Gold has seen its ups and downs over the centuries, although the lust for the alluring yellow metal never seems to fade away, especially in India. Festivities, occasion or investment the faith on gold as an investment is resilient.

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