The demand for gold has gone up manifold in the last few years. It posted returns to the tune of 31% in 2020, its second-highest since 2008. 10-gram 24K gold rate soared to Rs.57,100 for the first time in August 2020, before tumbling below Rs.50,000 in December 2020. Several factors influence such price fluctuations. In case you plan to invest in gold, learning about these aspects can certainly help you maximise returns and optimise risk.
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.
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 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.
The value of USD dominates the international market of gold. When its value decreases, the price of this precious metal increases and vice versa
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 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.
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.