Gold and Indians are inseparable. The love of gold for us Indians is evident with the fact that no important occasion goes by without buying some form of gold, be it jewellery, gold brick or any other form. Which is why it is necessary to know what the right time is to buy gold and how some of the external factors affect its price. Ideally, major factors that affect gold are the decision of buying gold by Reserve Bank Of India, Exchange Trade Funds, economic conditions etc… Let’s check out:
As we know, the central bank of India, RBI holds gold reserves which when goes beyond a certain limit, it starts affecting the overall price of Gold. As the bank starts procuring more gold, the demand for gold rises and hence the price.
Indians tend to buy more gold during festival and wedding seasons, which mostly begins in October. The peak season remains until March. During this time of the year, the sale of gold jewellery increases rapidly irrespective of the price. It often leads to the supply crunch and for which gold gets imported from other countries which affect the gold price here.
The rate of interest in financial products and services impacts the demand for gold. The lower the interest rate, the more people have cash. It leads to an increase in gold buying, thereby affecting the gold price.
As compared to cash, Gold acts as a safeguard during times of inflation. In fact, investors mostly prefer cash to gold. When inflation occurs, the demand for gold increases and vice versa. As a result, the price of gold rises.
Any political move or deal hugely affects the price of gold globally. As Gold is one of the important commodities, its price is likely to get affected. Since a large part of Gold in India is imported, Gold prices in India are equally vulnerable.
No matter what, Gold is always going to be a significant part of Indian’s lives and irrespective of the prices, they will always be interested in gold buying. But at the same time, one should be aware of all the current factors and its consequences before buying it for investment or any other purpose.