Gold prices in India remained relatively stable on Wednesday. The price of gold stood at 7,693.90 Indian Rupees (INR) per gram, which is nearly unchanged compared to INR 7,695.18 on the previous day. The price for gold per tola was also steady at INR 89,740.09, compared to INR 89,755.02 a day earlier.
These prices are determined by adapting international prices (USD/INR) to the local currency and measurement units. The data is updated daily based on market rates at the time of publication, although local rates may diverge slightly. Gold has historically played a key role as a store of value and medium of exchange.
Today, besides its shine and jewelry usage, gold is widely seen as a safe-haven asset, making it a preferred investment during turbulent times. It also serves as a hedge against inflation and depreciating currencies, as it is not reliant on any specific issuer or government. Central banks are among the largest holders of gold.
To support their currencies, especially during financial instability, central banks diversify their reserves and buy gold to signal economic strength.
Gold’s safety amid economic turbulence
In 2022, central banks added 1,136 tonnes of gold, worth around $70 billion, to their reserves, according to the World Gold Council.
This was the highest yearly purchase recorded. Emerging economies, such as China, India, and Turkey, are rapidly increasing their gold reserves. Gold generally has an inverse correlation with the US Dollar and US Treasuries—both major reserve and safe-haven assets.
When the US Dollar depreciates, gold prices typically rise, allowing investors and central banks to diversify their assets during turbulent times. An inverse correlation also exists between gold and risk assets; a rally in the stock market can weaken gold prices, while sell-offs in riskier markets tend to benefit the precious metal. The price of gold can fluctuate due to various factors, including geopolitical instability or fears of a deep recession, which often drive up gold prices due to its safe-haven status.
Gold, being a yield-less asset, tends to rise when interest rates are low and fall when interest rates are high. The behavior of the US Dollar (USD) is also a significant influence; a strong dollar can keep gold prices controlled, whereas a weaker dollar is likely to increase gold prices. In conclusion, while gold prices in India showed little movement on January 29, the factors influencing its price remain complex and varied, involving currency behavior, interest rates, and global economic conditions.
