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Tuesday, April 16, 2024

Factors That Influence Gold Rate

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In India, gold has always had relevance since it was used during weddings and festivals as a sign of opulence. Over the years, investing in gold has evolved as an ideal hedge for volatile markets primarily due to the scarcity of the metal. In recent months, online gold rate have been on a constant rise. And after the crash in March 2020 due to the lockdown, they have managed to surge and cross the 50,000   3Rupees per 10 gm mark. This sharp increase has certainly made investing in gold more profitable for most investors around the world.

There are a number of factors that have an influence on the pricing of gold. Online Gold Rate are affected by the following:

Demand and Supply

Gold is a precious metal with many uses. It has been used in jewelry, coins, and other ornaments since time immemorial. Today, it is also used for high-tech devices. The supply of gold is controlled by the Central Banks of the world. Not surprisingly, most of the stock of gold is held by governments as part of their reserves. The demand for gold is perpetually rising. It is an essential item in any portfolio which reflects the state of affairs in the world economy.


Inflation is a state of continuous rise in the prices of goods. It depreciates the value of currency over time. When the inflation rates rise, the value of the currency decreases. This happens because the dollar buys lesser goods and services with more supply coming into the market than the demand. The downfall of a given currency also happens when there is no possibility of trading it for alternative currencies or gold. Hence, most people start investing in gold as a safe haven asset.

Interest Rates

The price of gold is inversely related to the interest rate. When the interest rates are high, people don’t get good returns on their deposits. They break their deposits and buy gold instead that brings down demand and the price. When the interest rates are low, people sell their gold and invest in deposits that leads to an increase in demand and today gold rate in bangalore

Indian Jewelry Market 

Though this demand fluctuates with festivals and wedding seasons, personal savings are the primary source of gold purchases in India. Unlike other gold-loving countries, Indians prefer to buy jewellery made up of 24K (99.9%) gold. This, along with a high value for gold in the Indian markets, makes it necessary for jewellers to cater to both the “aspirational buyer” as well as those looking for cheaper alternatives.

Government Reserves

The Government of India issues in its annual budget that the Government holds gold as a reserve. Based on its policies, the GOI may buy or sell gold through the RBI. The price of gold can get impacted depending on whether it buys or sells more. This is because it directly impacts the quantity of gold available for sale in the country and hence, affects online gold rate.

Import Duty

The import duty as per Indian law is applied to the value of gold, including silver, calculated in INR. In most countries, the import duty is applied to the Actual import value. Any fluctuations in USD or INR will affect the price of gold and hence the price at which we offer it to you.


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