In India, gold is a family tradition and one of the most preferred forms of investment. When a child is born, the first gifts that parents buy are gold ornaments for both the newborn and its elder sister. With inflation on the rise, buying gold becomes the need of an hour. It gives you the freedom to invest in something worthwhile – something that will always be precious but at the same time will not affect your pocket.”
When we talk about the factors that cause the online gold rate to rise or fall, we are referring to the economic forces that influence its value. These forces, in turn, change the price of gold and silver.
Demand and Supply
The price of gold has increased significantly in the past 20 years. People like to invest in gold because they feel it is a valuable product that can be an investment, thus will pay for itself in time. Another reason why people like to invest in gold is due to the increase in the demand for gold jewelry and gold coins.
The mining companies also started to print many currencies so that people can buy the amount of gold that they want with the paper money. The more currency is printed, the lower the value of each currency. This has made the people invest in gold as a hedge (insurance) against inflation.
Gold has been considered as one of the most reliable forms of investment when inflation surges. It can be inferred from history that the more the inflation rates rise, the more gold becomes valuable. While other investments return under such circumstances, gold is one of those rare forms of investment that tend to yield good returns when the inflation rate rises.With the current market trend, investors who are looking to hedge against the stock market or bet on stocks might be interested in trading gold.
The popularity of precious metals has grown over the years as an investment class because unlike other currencies, gold is considered a tangible asset that’s easy to transport and easy to store. Although there’s no guarantee that investment into gold will generate profits, as a whole; demand for this asset class goes up when the financial markets go down.
Interest rates have an inverse relationship with online gold rates. Higher interest rates are likely to increase liquidity and reduce the willingness of borrowers to repay their debt earlier. It leads to a fall in demand for gold which reduces its price. On the other hand, lower interest rates make borrowing easy so people buy more gold expecting that they will get returns on their investments thereby increasing demand and hence the price of gold.
The Government of India holds gold reserves. Based on its policies, it can buy or sell gold through the Reserve Bank of India (RBI). The price of gold can get impacted depending on whether it buys or sells more. The rates for both buying and selling are decided by the government of India based on the average price from the international spot market and value of Indian rupee. Government reserves can be held by RBI in foreign exchange, government securities, or gold.
If you have plans of investing in gold, you must focus on the import duty before buying any gold product. India has extremely high import duties on gold, which makes a considerable impact on the price of gold. However, one can stay away from the duty by availing the services of an exporter that offers duty and tax paid (DTP) products to their customers. Duty-and-tax-paid products are free from import duties and come with valid documents for exports. Using a gold price calculator, you can easily calculate your gold rate as per your market price value.