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Top 5 Factors That Affect Gold Rate In India

Top 5 Factors That Affect Gold Rate In India

Gold is one of the top-leading luxurious commodities that has a very high demand in the country. In India, the most significant fraction of gold is found in households in the form of jewellery. Apart from being a part of Indian families, golden jewels are also possessed by temples and other religious places. The yellow metal has a dynamic price and plays a prominent role in determining the condition of the world economy.

There are different factors on which the price of gold can depend. These could be global conditions, inflation, market cultures, Government indulgences, or interest rates. Here you can get a detailed study on the various factors on which the gold rate can depend. As the price of gold generally remains high, one can get reasonable prices while availing of a loan against gold. High gold value can increase the chances of gold loans for people who possess gold. Also, a more significant amount can be borrowed by keeping gold as a mortgage.  However, you must remember that the lenders only provide gold loans against jewelry.

Factors Affecting Gold Prices in the Country

Global condition

The global condition of the gold price is the primary factor that affects its worth in the country. It would help if you always remembered the fact that India is a leading importer of gold. Thus, the investors tend to buy the yellow metal when the global prices are less. On the other hand, during a political or economic crisis, the amount of gold can elevate dramatically. The investors sell gold during this time and incur a decent profit. In India, gold bullions are not accepted by the loan providers. Thus, investors can only opt for golden jewellery. Thereby, gold prices are highly dependent on factors like global conditions and international relations. 

Inflation in India

Indian economy keeps fluctuating, and Inflation in India is quite a long-going phase. In the present condition of inflation, the worth of Indian Rupee might experience a sharp depreciation in comparison to international currencies like USD. Thus, more people will look forward to purchasing gold resulting in its high demand in the market. In the case of global inflation, too, the price of gold can fluctuate a lot that directly creates an impact over the gold price in the country.

The Market of Jewellery

India is a land of celebrations and festivities during which gold is considered auspicious. The gold jewelry market is one of the largest markets in India. Due to the demand factor during festivals and wedding dates, gold prices suddenly increase. Gold is one of the prominent raw materials. At times the availability of gold depends upon the controllers of this jewellery market. If the availability of gold is less in the jewellery market, the price will elevate and vice versa. Generally, the availability depends upon the guidelines given by the government. 

Government Reservation

The golden asset is a reliable source in times of need. The gold is often reserved by the Government of India to sustain the economic crisis at times. In such a condition, too, you can find the scarcity of the yellow metal in the jewellery market. This can drastically elevate the price of gold. The government can also reserve gold to minimize the cash flow in the country. Thus, the amount of gold plays a crucial role in balancing the economic condition of the country. 

Interest rates

The worth of financial products like loans, bonds, etc. affects the demand of the yellow metal. The financial products mainly deal with interests. The rate of interest in these products is inversely related to the price of gold due to a negative correlation. As interest rates on these products increase, gold rates go down. 

These are the top five factors on which the price of gold depends. While you buy gold for making ornaments, make sure you check the on-going price of gold. Moreover, try checking the hallmark on the gold as it denotes the purity of gold. Remember that providing hallmarked gold jewelry can help you acquire more principal amount when you seek a gold loan. Apart from keeping the determinants of the price of gold in mind, it would help if you also went through the terms of the gold loan lending company.    

Author Biography.

Shagun Azad
Shagun Azad

Content Writer

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