Factors That Affect Gold Rate In India:

• Inflation:

One of the most important features of this asset class is its steady nature as compared to currency. In times of high inflation, the value of the money goes down while the value of gold surges or remains almost stable. Hence, it’s wiser to invest in gold. 

• Interest Rate Trends

The gold price is inversely proportional to the interest rates on financial services and products. When interest rates dip, people receive poor returns on their investment and deposits. During these times, people break their deposits to invest in this asset class instead, which increases its demand and, subsequently, its prices. One can consider trading in digital gold to that end to benefit from real-time gold price fluctuations. 

• The Monsoon Factor

The rural demand for this precious metal is another crucial factor that affects the gold rate in India, and this demand depends on the monsoon. A good monsoon means a good harvest. Hence, farmers buy more gold to strengthen their asset base.

• Dollar Dynamics

The value of USD dominates the international market of gold. When its value decreases, the price of this precious metal increases and vice versa

• Jewellery market

There is an increased demand for gold ornaments during celebrations and festivity, further boosting the market. Higher demand leads to a higher price.

Gold Rate Trends In The Last 1 Year:

Gold rate in India and globally witnessed fluctuating trends through 2020 due to the COVID-19 pandemic. When stocks were underperforming, this asset class emerged as the most viable option to invest in. This factor hiked its demand, helping it surpass the 50,000-rupee mark.

What Are The Gold Investment Options Available In India?

• Digital Gold - It can be bought online, where the seller stores an equal quantity of physical gold in vaults on a customer’s behalf. A buyer can be assured of obtaining the purest form of this precious metal when buying them online via platforms such as KredX. 
• Physical Gold Coins And Bars – One can also buy gold in its physical format by obtaining bars, coins, or jewellery. In this case, purity can vary among 18K, 20K, and 22K.
• Gold Exchange Traded Funds (Gold ETFs) - This is an electronic form of gold that tracks its market price and represents it in dematerialised form. One gold ETF is equivalent to one gram of the metal of the highest purity. Gold ETFs trade on the National Stock Exchange and Bombay Stock Exchange Ltd. One gets cash per the current gold rate against their holdings when redeemed.
• Sovereign Gold Bonds (SGBs) - These are government security gold bonds denominated in grams of gold. Generally, issued by the Reserve Bank of India, investors will have to pay an issue price for the bond in cash and likewise redeem in cash on maturity. It attracts a 2.5% interest, payable periodically by the issuer. 

Among the several options, digital gold is becoming increasingly popular. When the nation witnessed lockdown and shuttered jewellery shops, the demand for this virtual investment instrument surged. Despite strong competitions from gold exchange-traded funds and sovereign gold bonds, the digital gold market has created a base of loyal investors throughout India. One of the reasons is individuals can benefit from the gold rate today in real-time to optimise their returns. Potential investors can trade in this investment instrument through KredX, a digital gold marketplace partnered with Augmont Gold Ltd.