Gold Rate: Why Are Gold Prices Rising? India Business News
NEW DELHI: Gold prices They have been ruling at unprecedented levels in India and in global bullion markets, as investors prefer safe-haven assets amid the economic uncertainty caused by the Covid-19 pandemic.
The managing director of the World Gold Council (India), Somasundaram PR, noted that gold price Exceeding the Rs 50,000 mark is a key milestone and the response is naturally mixed: happy investors and cautious consumers.
Domestic prices are influenced by an interaction of several global factors: low or negative interest rates and turbulence caused by trade conflicts and geopolitical tensions, he said.
The dollar-rupee exchange rate also contributed to the rise in domestic prices, amplified by Covid-19 related disruptions and a general feeling of insecurity, Somasundaram said is expected to add volatility with underlying bullish sentiment such as disruptions and uncertainty caused by blocking and fear. induced behavior continue.
Will gold prices increase further?
The price of gold is likely to increase further in the next 12 months after the US election, Covid-19 related disruptions and geopolitical tensions, said managing director and CEO of jewelry brand PN Gadgil, Saurabh Gadgill.
“We expect gold to reach around Rs 65,000 for every 10 grams in the domestic market in the next 12 months, while reaching $ 2,500 an ounce in international markets,” he said.
Why is gold considered a safe haven?
Gold, which is an integral part of wedding ceremonies in India, is mainly used as a hedge against inflation and is considered a safe haven for investors during periods of uncertainty.
“Gold is traditionally used as a hedge against inflation, and global economies are considering further stimulus to drive growth, which may further boost inflation. We expect precious metals to trade until the number of global cases of Covid-19 is under control or a vaccine is introduced to the market, which is still a few months away, “said Nish Bhatt, founder and CEO of Millwood Kane International.
Vaibhav Saraf, director of Aisshpra Gems and Jewels, opined that gold has always been a safe haven for investors worldwide.
“Increasing international border tensions, the trade wars and Covid-19 are further driving this growth. Demand will be affected in the short term, but once the price stabilizes, buyers will accept the price and demand should increase again, “he said.
Fall in consumer demand
The jewelry industry expects consumer demand for gold to weaken further amid rising precious metal prices and the economic slowdown.
“Demand is already very slow right now, with only 20-25 percent of business following the economic slowdown, job insecurity, social distancing and closings due to Covid-19. The high price of gold is it will add to slow consumer demand, “said the chairwoman of the National Jewelery and Jewelery Council of India, Anantha Padmanabhan.
(With PTI inputs)