WHY GOLD PRICE IS RISING IN INDIA

Gold is a chemical element with the symbol and atomic number 79,
making it one of the higher atomic number elements that occur
naturally. In a pure form, it is a bright, slightly reddish yellow,
dense, soft, malleable, and ductile metal. Chemically, gold is
a transition metal and a group 11 element. It is one of the least
reactive chemical elements and is solid under standard conditions.
Gold often occurs in free elemental form, as nuggets or grains,
in rocks, in veins, and in alluvial deposits. It occurs in a solid
solution series with the native element silver and also naturally alloyed with copper and palladium.


As per the world gold council, gold demand in India is about to rise
33% by 2020. … Recently India has become the largest consumer
of gold and the price of gold is likely to breach Rs 32,000 mark in the
next calendar year. There is an inverse relationship between the gold
prices and the dollar.


Gold has been one of the most traditional forms of investment.
Before we knew about fixed deposits or stock markets or mutual
funds, buying gold was one of the preferred means of investing.
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, gold prices have been on a constant rise. And
after the crash in March due to the lockdown, they have managed to
surge and cross the 50,000 mark in July 2020.
Many investors are concerned with the sudden surge in gold prices.
And so, many investors started buying undervalued, high-quality
stocks. However, with time, the hopes of a near-term recovery got
dampened and investors started looking at a safe haven for their
funds.
Since gold is considered to be a perfect hedge against inflation and
economic turmoil, the demand for gold increased.

  1. High Liquidity
    The RBI allowed borrowers to avail of a moratorium on loan
    repayments till August 31, 2020. The Government also declared a
    lot of economic stimulus packages to pump liquidity into the
    markets. So, we had a situation where investors had money to
    invest but the stock markets were highly volatile and interest rates
    were falling. Hence, they started investing in gold that is known to
    be a safe investment during such times.
  2. Reduced Gold Mining
    The primary factor that affects gold rates is the demand and supply
    equation. While the demand increased, gold mining activities were
    severely impacted due to lockdowns in various countries. This
    impacted the supply causing the prices to rise further.
  3. Exchange Rate
    The Indian Rupee has fallen sharply since the lockdown. Currently, it
    is around 75 against the US dollar. Since India is the second-largest
    importer of gold, such exchange rate fluctuations impacts gold
    prices.
  4. Rise in International Gold Prices
    The price of gold in India is affected by its international price. Over
    the last few weeks, rising number of coronavirus cases, increasing
    US-China tensions and overall economic slowdowns have led to a
    the constant rise in gold prices around the world.

So these are few reasons for price rise of Gold In India.

Also, read What is P/E ratioNRI Tax BenefitWhat is Financial Management and Tax slabs in india

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