Gold prices in India rose on Monday, with the price for gold standing at 8,045.15 Indian Rupees (INR) per gram, up from INR 8,014.58 on Friday. The price for gold increased to INR 93,838.03 per tola from INR 93,480.45 per tola on Friday. Gold prices in India are calculated by adapting international prices (USD/INR) to the local currency and measurement units.
Prices are updated daily based on the market rates at the time of publication. Local rates could diverge slightly from these figures. Gold has played a key role in human history as a store of value and medium of exchange.
Currently, apart from its luster and use in jewelry, it is widely seen as a safe-haven asset, considered a good investment during turbulent times. Gold is also viewed as a hedge against inflation and depreciating currencies, as it doesn’t rely on any specific issuer or government. Central banks are the largest gold holders.
In their aim to support their currencies during turbulent times, central banks diversify their reserves and buy gold to improve the perceived strength of the economy and currency. High gold reserves can be a source of trust for a country’s solvency.
Gold prices rise amid inflation concerns
Central banks added 1,136 tonnes of gold worth around $70 billion to their reserves in 2022, according to the World Gold Council. This was the highest yearly purchase since records began, with central banks from emerging economies like China, India, and Turkey quickly increasing their gold reserves. Gold has an inverse correlation with the US Dollar and US Treasuries, which are major reserve and safe-haven assets.
When the Dollar depreciates, gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken gold prices, while sell-offs in riskier markets favor the precious metal.
The price of gold can move due to various factors. Geopolitical instability or fears of a deep recession can make gold prices escalate due to its safe-haven status. As a yield-less asset, gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal.
Most movements in gold prices depend on how the US Dollar (USD) behaves, as gold is priced in dollars (XAU/USD). A strong Dollar tends to control the price of gold, whereas a weaker Dollar likely pushes gold prices up.
