The price of gold is increasing in the world market. Gold prices have not increased as much due to a couple of US dollar exchange rate increases every few years. But the US central bank’s Federal Reserve policy will cut interest rates; gold prices are now rising rapidly in the global market after the news that the market spread.
Apart from these factors, let’s see what other market events are affecting the price of gold.
According to the Hindustan Times, the price of gold has risen to a record high in the Indian market in keeping with the global market. The price of 10 grams of unalloyed gold has risen to 65,298 rupees in the country’s market. In the first 10 days of this month, the price of gold per 10 grams has increased to Rs 2,700. In this situation, it is feared that the sale of gold will decline.
The primary cause of the abrupt increase in gold prices on the international market is reportedly the decline in the value of the dollar index. The dollar index, which measures the dollar’s value against six major world currencies, fell last month. This month, the dollar index dropped below 104, peaking at 103.80.
The price of gold falls in response to an increase in the dollar exchange rate. Since the last week of September of last year, there has been a decline in gold prices, partially because the US 10-year bond yield hit a 16-year high and the dollar has strengthened versus the index.
The use of gold is not limited to making ornaments; rather, gold is more important as an investment medium. Investors look for alternative investment methods in these situations, such as rising bank interest rates or robust stock markets. Then gold became less in demand. For this reason, in 2022 and 2023, investors made investments in bonds denominated in dollars. Investors are now prioritizing gold investments because bond yields will decline in tandem with a reduction in interest rates from the Federal Reserve.
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However, in February, overall gold prices fell in the global market. Gold prices fell by 0.25 percent to $2,320 per ounce last month. In the Indian market, the price of gold fell by 0.67 percent last month.
In addition, gold purchases by the central banks of the world have been increasing for several years, although in 2023 the central banks bought slightly less gold than the previous year. Last year, they bought a total of 1,373 tons of gold.
Researchers believe that inflation has no special relationship with rising gold prices. The main reason behind the rise in gold prices is fear and panic. Ever since the Great Depression of the 1930s, it has been seen that when a crisis occurs, the price of gold rises. According to data from GoldPrice.com, during the 1970 crisis, the price of gold rose by $35 to $525 an ounce; in 1980, that rate was $615. By 1990, it had dropped to $383.
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But after the financial crisis in 2008, the price of gold increased significantly in 2011. Then the price rose to 1,900 dollars. Sometimes, however, the price of gold fell to 1 thousand 49 dollars around 2015, but it did not stay at that price for long. Since then, prices have only increased.
The International Monetary Fund (IMF) says this year’s growth will be the slowest since the pandemic. Also, the Federal Reserve policy will reduce interest rates; mainly because of these two reasons, analysts believe that the price of gold is suddenly increasing now.
