5 Factors that Affect Gold Price Today

Let us now investigate some of the most significant factors that determine the gold price today.

5 Factors that Affect Gold Price Today
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Gold is a revered metal in the culture of India and holds importance in all Indian traditions. Be it festivals, birthdays or any other auspicious occasion, gold is at the heart of all Indian festivities. A number of Indians also look at gold as an important investment today, an investment that can be brought to use in times of a financial crisis. Gold has been living up to its standards for a long time.

Let us now investigate some of the most significant factors that determine the gold price today.

One sure thing and an important factor that considerably affects the gold price today is the international market. India is the largest gold consumer, and any difference in its price on an international level has a huge impact on the gold price in India.

  • Inflation 

Gold, due to its majorly steady character as compared to the currency, holds immense value and is also utilized to hedge inflation. This is why investors prefer to get a hold of gold instead of currency. As a result, when inflation is at its peak, the demand for gold also increases, sharing a directly proportionate relationship. The price of gold also shoots up as a result of high consumer demand. This holds true for the inflation that occurs in India and international inflation.

  • Global Movement

Any type of global movement in the gold price today impacts the gold price in India. This majorly arises from the fact that India is one of the biggest importers of gold. Therefore, when there is a change in the prices of imports due to a global level movement, the same has a resultant effect on the gold price today in India. Since the currency value and a number of other financial products may fall during political disorganization, gold is considered to be a safe haven for all the investors out there. Also, the demand for gold and the gold price today witnesses a rise in case of political disorganization as compared to when the situation is peaceful. The level of interest in buying gold also rises amongst customers at a time when their confidence in the market and the government falters. This is also why gold is referred to as a ‘crisis commodity.

  • The Government-held Gold Reserves

The central banks of most of the big countries hold both gold and currency reserves. The Reserve Bank of India and the US Federal Service are two prime examples. When the Central banks of these countries start holding gold reserves and procuring a significant amount of gold, the gold price in India goes up. This is because the cash flow in the market witnesses an increase when the gold supply tends to go down.

  • The Jewelry Market

Indians share a special bond with gold. Be it birthdays or festivals, gold jewellery holds a special place in all Indian households. During the wedding season and also during important festivities like Diwali, the prices of gold also go up as a result of higher consumer demand. The mismatched demand supply leads to a rise in the gold price in India. In India, gold is used not only as a jewellery requirement for a number of festivities but also as a strong hedge against ever-rising inflation. A combination of these factors makes the demand for the gold rise and also a rise in the gold price today, so much so that India has to import huge quantities of gold to meet the demand.

  • The Trends of Interest Rates

The interest rate on services and financial products is very closely tied with the demand for gold in the country and the gold price today. The current price of gold is usually a good indicator of the interest rate trends in the country. With a higher rate of interest, the consumers tend to sell gold and acquire cash in return. This ultimately leads to an increased gold supply that ultimately leads to the reduction in the gold price today in India. As an alternative to this, lower interest rates ultimately translate into more cash in hand and a greater demand for gold, resulting in an uprise in the gold price in India.

If your interest-earning in total exceeds the minimum threshold amount, you will be eligible for TDS on FD as per the Income Tax Act, 1961.

On a Parting Note 

Apart from the factors listed above, there are other factors, such as the production of gold, and the subsequent cost of production, which has an influence and impact on the gold price today or the gold price in India. However, it is important to remember that irrespective of the number of factors that ultimate the gold price today, it all comes down to the so-called "demand and supply" game. The basic mismatch in the demand-supply is one of the primary factors driving the price of this precious metal.

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