India is considered among the world’s largest consumers of gold. For ages, gold has remained a valuable yellow metal in urban and rural areas of India because of its desirability, durability and flexibility. Specifically, women adore wearing gold ornaments even when the gold prices rise. Gold is a costly metal, and the prices keep fluctuating as per the rise and fall in the stock market.
What factors that affect the gold rate in India
Many factors determine the rate of gold in India. Let’s get a broader idea of some important factors mentioned below:
- Demand & Supply –When the demand for gold increases and the supply is less, you will experience a hike in the price of gold and vice versa. Gold is one such product that is always in demand, yet, during the festival and weddings, you may witness a high rise in the price of gold.
- Inflation –Indians prefer investment in gold, as it is a hedging tool during inflation. When inflation escalates, the currency value reduces. Hence people prefer to hold money in the form of gold as their investment.
- Central Bank Decision – When the central bank buys and sells gold, it affects the domestic currency supply and demand, giving rise to inflation. In the simplest term, inflation is the increase in the rates of goods. Banks depend more upon printing currency to buy gold, creating an excess supply of currency. For inflation to not intensely impact the nation’s economy, the country requires investments not tied to the dollar.
- Interest Rates have a reverse relation with gold. Generally, the gold price drops when the interest rate is high and goes up when the rate is down. Rising interest rates make stocks, government bonds and other investments more appealing to investors than investing in gold. This impacts the gold price.
- Currency Fluctuations – As gold is traded in the international market in US dollars and when Us dollars are converted to Indian rupees during import the gold price fluctuates, resulting in the high and low gold prices. If the Indian rupee declines, gold import turns pricier.
- Government Reserves – When RBI starts to reserve a greater quantity of gold than selling, the gold rate increases as it will result in insufficient supply of gold and vice versa.
Hence, the gold price trend has been witnessing ups and down in India. Earlier, the gold price was significantly affordable compared to recent times. But as the rupee value weakened, gold prices increased.
How has the Gold Rate and Price trend in India changed?
For decades, gold has always seen an increase in the 24 karats 10-gram gold rate price trend. 24-karat gold is 100% genuine and of the finest quality. However, the gold price keeps fluctuating and varies from city to city.
Here is a glance at gold prices from 1960-to 2022 in India.
- From 1960-to 1970, gold price was rated between Rs.111-Rs.176.
- Next, in the year1970 -1979, the gold price jumped to Rs.184– Rs.890.
- Further, in 1980-1990 the gold market saw a hike of Rs.1300 to Rs.3200, and to date, the gold graph has been on the increase.
- Subsequently, from 1990 to 2000, the gold rate trend was approximately Rs.3200 -Rs.4400.
- In the current years 2000 to 2022, the gold trend has steeped from Rs.4500 up to Rs.51,246 for 24 karats 10-gram gold.
However, the gold rate keeps fluctuating and slightly varies as per the location. In every Indian city, the gold rate differs slightly based on the demand and supply of the commodity. Besides, India is a country where gold is purchased largely and works as an investment at the time of economic downfall.