Before you buy gold, check out the gold rate in India. Today’s gold price is largely dependent on the global market conditions, geo-political tensions in the United States, and GST. This article will discuss what’s driving today’s gold price in India and how it’ll affect your investment. In addition, we’ll look at what the impacts of these events will be on the gold price in the near future.
Prices of gold in India
Gold price in India increased on Monday, and the metal was trading at Rs.4,681 per gram on Monday. The metal gained in value during the past week as investors shifted back to the bullion market. Due to a surge in COVID cases around the world, the price of gold jumped from Rs.4,466 on 27 April to Rs.4,780 on 28 April. On 29th April, gold prices hit the highest point of the month at Rs.4,781 a gram. However, prices of gold fell in the international market.
The overall price of gold in India declined in the last week. It closed at Rs.4,725 per gram on 30 May, but recovered marginally on 31 May. This was due to a rise in equities in Japan. This in turn increased the appetite of investors. Hence, gold prices rose marginally on 31 May. But, the trend was reversed on 28 June, and gold prices have gone up since.
Global market conditions
The market for gold has a number of factors determining its price. Gold is used for industrial purposes as it is easily worked and conducts heat and electricity, making it an important industrial raw material. It has been used in dentistry for over three thousand years. Nearly 75 percent of gold is worked for the jewelry industry, and it is mined on every continent except Antarctica. In addition to jewelry, gold is also used in electronics and engineering. Its applications in these fields have created innovative solutions to some of the world’s health and environmental concerns.
While gold’s price has remained relatively stable over the past two months, investors should be wary of rising gold prices. In addition to the price of gold, many investors are concerned about the rising dollar. The Fed has pushed interest rates higher, increasing the cost of holding gold. Rising U.S. short-term interest rates, including the Federal Reserve’s rate hike in June, are further discouraging investors from buying gold.
Impact of geopolitical unrest in United States of America on gold prices in India
In recent weeks, geopolitical unrest in the United States of America has affected gold prices. The dollar has been weaker than other major currencies, and gold has become a more attractive asset. The US dollar has a historically negative relationship with gold. Furthermore, heightened tensions in the Ukraine and Russia standoff likely contributed to the increase in gold demand. As a result, US president Joe Biden has approved the sending of additional troops to Eastern Europe.
In response to this situation, gold prices rose over the last four days. Investors are increasingly nervous of a war and prize gold for its stability. The price of gold has gained in twelve of the last 15 sessions, including the last seven through Monday. On Thursday, the most actively traded gold futures reached $1,902, but dropped 0.1% on Friday. Meanwhile, Asian markets are closed for Lunar New Year.
Impact of GST on gold prices in India
GST is set to impact gold prices in India. As the value of gold rises, the import duty on the metal also goes up. The GST amount, therefore, varies from time to time depending on the price of the metal. However, the GST-related change in the price of gold is unlikely to affect the price of gold much. This is because the GST allows input tax credit, which helps different players in the gold market.
While the price of gold is determined by many factors, currency fluctuation, import duty and geopolitical scenarios all impact the value of gold. The GST rate on gold is a closely monitored factor. The rate of GST on gold, which is 3% inclusive of making charges, will have a minimal impact on the cost of gold. In addition to the GST rate on gold, the price of silver will also increase.
Impact of Bank of England interest rate hike on gold prices in India
The Monetary Policy Committee (MPC) of the Bank of England meets eight times a year and, in a highly significant event, the members may have to consider raising interest rates. This decision could have a dramatic impact on gold prices and national markets. According to the World Gold Council, interest rates have a negative correlation with gold, and higher rates generally signal a strong economy and the confidence of investors to buy stocks.
In the near term, gold prices are expected to consolidate within a range, as the dollar index continues to rise. Investors will be closely monitoring market risk sentiments, as well as the price of crude oil, as it will influence inflation expectations. Additionally, the testimony of US Fed Chairman Janet Yellen will provide some insight on central bank policy guidance. Finally, the impact of the hike on gold prices in India will depend on the underlying drivers of the gold price.
