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Factors Leading to Price Rise in Gold

Posted on 2019-08-28 in KNOWLEDGE PORTAL

Purchasing gold jewelry or making an investment in gold is hitting hard the buyers and investors due to the rise in price. The price of gold for 10 grams in India has crossed 40,000, which is the highest of all time. Even gold prices in global markets are at a six-year high of $1,500 per ounce. Lots of factors are attributed to the rise in gold prices some of which we have deciphered for you.

Gold Price in Global Market

As India mainly imports the yellow metal, its price in the domestic gold market gets affected whenever there is a change in its price in the global market. This also compels to alter the import duty on gold. Further, the difference between the exchange rate of rupee and dollar also affects the gold price in the domestic market.

China and US Trade War

Ever since the United States declared about imposing trade sanctions on China, the two countries are at loggerheads with each other. Since China is not ready to accept the sanctions imposed by the United States, there are talks going on between these two countries to settle the matter. Unfortunately, nothing productive has come out yet.

Import Duty

The import duty on gold has been increased from 10% to 12.5% by the NDA government in the budget declared in July 2019. This is the third time that import duty on gold has been increased by India causing a rise in the gold price.

Increase in Gold Reserve by the Central Bank

Central banks all over the world invest in gold and currencies for future use. When these banks start increasing their gold reserve, it leads to rise in gold price. In India alone, the amount of gold purchased by central banks in the second quarter of 2019 is reported to be around 224.4 tonnes.

Rise in Gold Demand

Indians are crazy about the yellow metal and love to buy gold jewellery and make gold investment. So the demand for gold jewellery and gold investment keeps growing each year. In fact, when a comparison was made for the first and second quarters of 2018 and 2019, it was seen that the gold demand has risen by 13%.

Apart from these factors, another reason that can be attributed to the rise in gold price is the fear of recession looming large on the world. To prepare for such a crisis, lots of domestic and global investors look at gold as the safest investment options. This also indicates that the gold prices will continue to grow in the future.








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