Gold is traded on both global and local levels. In India, it is primarily traded on the Multi Commodity Exchange (MCX). It has a benchmark known as MCX Gold which represents 99.5% purity gold of 24 karats. However, in reality, most of it purchased by Indians is 22 karats (91.7% pure) or less than that. Its Prices in India depend on a host of factors, including international gold rates, local tariffs and also currency movement against the dollar. Since its prices are determined by several factors, it is not possible to tell whether prices will increase or decrease. However, one can get a fair idea about the trends by studying the price charts well. You can prepare your own charts too merely by keeping track of metrics such as today’s gold rate Tirupati between a given period of time. It has always been seen as a commodity that helps as an investment option and in times of economic uncertainty, this trend is likely to continue.
Table of Contents
1. Supply
While demand may be high at any given point in time, the supply of the metal tends to be limited. This is because there are fewer mines around the world that produce the metal. Further, there is no way to build up reserves of the metal without mining it from the ground. Any other means of obtaining the metal would require someone to sell theirs for you to buy them – which would increase demand and push up prices! Unless you want to mine your gold using something like a Gold Cube, you will have to buy it from someone else.
2. Demand
The Indian household is known for its affinity toward it and with more disposable incomes, this trend continue for some time now. The demand for jewellery continues to be strong but so are other forms like bars & coins which people generally use as investments during times of uncertainty.
3. International Rates
International rates are another factor that influences the price and rate of it in India. As a commodity, it traded all over the world and the prices quoted in any given country depend on various factors such as demand and supply, local sentiment and international cues. If there’s a sharp rise or fall in global prices, it will have an immediate impact on the domestic market. You could see these effects in local prices as well. To confirm this next time there is a major international geopolitical event just look up the gold price in Allahabad and you’ll see for yourself how the price varies.
4. The Dollar Factor
This may surprise you but the dollar’s value against other currencies plays an important role when it comes to determining current gold prices in India. Also, we have observed that there is usually an inverse relationship between its rates in India and the dollar value.
5. Rate of Interest
Gold price and interest rates have an inverse relationship. When the interest rates rise, its prices tend to fall and vice versa. This is because when interest rates rise, people shift their investments from gold to other high-interest avenues of investment like bonds and fixed deposits.
6. Inflation
In most cases, an increase in inflation rates leads to an increase in the price of gold. This is because people tend to invest more in gold as it functions as a hedge against inflation.