Gold is often chosen as a good source of investment by Indians, especially during inflation, less money supply, etc. This is because during such changes, the rate of interest falls, but does not affect the price of gold. On the other hand, considering the different Indian festivals, prices of gold may fluctuate due to an increase in its exchange. For instance, gold price in Bangalore during a certain festival might not be as same as its price in Uttar Pradesh.
What are the Factors Influencing the Trend of Gold Prices in India?
The factors influencing price of gold and its changes in India over the last 10 years are as follows:
1. Demand and Supply
Gold is a long term asset and its price is mostly dependent on its demand and supply in future. If you identify that there are high chances of its price rising in future, invest now and earn heavy returns later. Besides, if its prices are tending to fall in future, it is advisable to invest later.
2. Economic Inflation
During inflation, the value of money falls in an economy and investing in such a situation can be very risky and subject to losses. Hence, during such situations, you will tend to invest in gold, which will increase its demand along with its price.
3. Rate of Interest
Gold is a fixed income instrument and its price is inversely related to the prevailing interest rates in the market. When interest rates in this market decrease, you invest in gold to receive heavy returns. As a result, demand for gold increases, resulting in a rise in price. Besides, when the interest rate rises, you tend towards investing in deposits, which reduces its demand and simultaneously its price.
4. Government Reserves
The Government of India can purchase or sell gold via the Reserve Bank of India. It can also deposit its purchased gold in the gold reserves. Therefore, the price of gold may vary depending on the amount being purchased or sold from these reserves.
5. Indian Jewellery Market
The demand for gold jewellery in the Indian jewellery market is more during wedding seasons or festive seasons. You will often see people exchanging gold as a gift during these seasons. Therefore, the price of gold rises with an increase in demand during these times. For example, gold rate in Telangana during a particular month of the year can differ from that of West Bengal, due to their different wedding times, festivals, and cultures.
6. Currency Value Fluctuations
As you know, gold is imported into India in large numbers, and you must also be aware that it is traded in USD before getting converted into INR. Hence, any fluctuations in the value of USD to INR can affect import prices, which will affect the price of gold.
7. International Market Fluctuations
The economy of India is heavily dependent on foreign markets for the import of gold. Therefore, any changes in exchange rates, import duties and other related factors can affect the price of gold in India.
Why is the Price of Gold Always on the Rise?
The four main factors responsible for the uptick of gold prices in recent times are as follows:
1. Weak Dollar Value
The value of the US dollar is always fluctuating. With a fall in its value in respect to the Indian rupee, you will see a rise in the price of gold.
2. Reduced Gold Mining
The reduction in gold mining activities has affected the supply of gold in the market. Therefore, with an increase in demand but no supply, the price of gold is increasing at a higher rate.
3. Interest Rate Fluctuations
When the rate of interest falls due to certain economic fluctuations, the demand for gold increases, as it can provide higher returns. As a result, this led to a rise in gold prices.
4. International Price Hike
Due to certain conflicts between countries, the economy faces inflation. This increases the demand for gold, resulting in a rise in gold prices.
How to Apply for a Gold Loan?
After having a significant idea about the uptrend in gold prices, you must be interested in getting a loan against your gold. The step-by-step process to apply for a gold loan is as follows:
Step 1: Go to the page of the respective lending financial institution showing gold loan applications.
Step 2: Click on the ‘Apply Now’ option. The application form will open.
Step 3: Fill in your basic details like name, mobile number, DOB, pin code, etc., correctly.
Step 4: Click on the ‘Submit’ option.
Step 5: An OTP will be generated in your mobile number or e-mail id for verification purposes. Add it correctly.
Step 6: Enter your bank account details.
Step 7: Submit the soft copy of all the required documents as mentioned in this form.
Step 8: Add your required loan amount, tenure and rate of interest.
Step 9: Submit this application form and wait for some time to get your loan amount disbursed to your bank account.
The price of gold is always fluctuating due to certain changes taking place in the economy or other. For example, the gold price in Bangalore during January in a financial year can be different from that of July. Hence, considering small changes in gold prices can help you get it at great deals.