5 Factors Affecting Gold Prices In India

In India, gold is means far beyond its monetary value also India is one of the largest consumers of gold worldwide. The annual demand in India for gold equals to almost 25 % of the total physical demand worldwide. From festivals to wedding, gold trading online has its own role to play here. The prices of gold in India are generally dependent on various factors which we have discussed in detail below.

1. Inflation Backed by Recession

Generally, it has been noticed that as the Indian Economy experiences inflation, the currency weakens and people prefer to invest more and more in gold. This creates a scenario for a higher demand of gold which eventually results in rising prices. Purchasing more and more jewelries, trading in gold and purchasing gold bonds and even keeping stocks of gold coins and bars is a general process across the Indian population during inflationary period. Hence, inflation has a direct impact on rising gold prices.

2. Reserve Bank of India

The central bank keeps a significant amount of gold reserve with it which is sold when the Economy is at a boom. Since, the major financial and institutional buyers are not so interested in buying these gold reserves, this results in a downfall in gold prices. Likewise, online gold trading in India also results in high volume of purchase and sale of gold by Exchange Traded Funds (ETFs) in share market. The transactions done on stock market also determines the supply and demand of gold.

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3. Interest Rates by Banks

When banks are not providing enough profitable interest rates on savings and deposits, people tend to withdraw their amount and even break their fixed deposits and invest in gold. This results in an increased demand of gold and as we all know increased demand always upsurge the prices. People in India are much more curious about their returns on investments and if they don’t find bullion trading and banks efficient enough to provide so, gold is the first priority which they adopt to secure their returns.

4. Safeguard Instability

For Indians, there is no other such metal like gold which people believe blindly. There is a custom and tradition to accumulate as much of gold as possible according to their financial status irrespective of the gold trading price and market conditions. People prefer trading gold and invest maximum in gold as they believe that it will safeguard their investments and give fruitful returns in difficult times. Whatever surplus amount they have, it has to be invested in gold jewelries, gold coins or even in gold bars.

5. Occasional Moments

India has a diverse culture which has its own moments to celebrate. During the festive times like in Navratra, especially in Deepawali and wedding seasons, there is a huge purchasing of gold almost in every household at their own level. Hence, around these festive seasons also the prices of gold tend to rise keeping upcoming demand in mind.

Gold trading in India is a traditional trend with a long history. People trust and enjoy the value as well as the emotional satisfaction which gold provides to them. They consider gold as a savior for them in their difficult times and hence these above mentioned points alter gold prices throughout the year.

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