We discuss the factors responsible for rising gold prices
In the backdrop of turbulence in financial markets, there is increased interest in gold
By understanding the drivers of gold prices, you can make more informed investments in gold
When investor confidence in financial assets dwindles sharply
This means equity and debt investments
This could be due to turbulence in equity and debt markets
Our financial investments are denominated in currencies like the rupee or dollar
If investors feel that an alternative like gold would be better in storing the value, they opt for it
This typically happens during times of financial crisis like in 2008-09 and 2020
During such periods there have been substantial interest and investments in gold
Political uncertainty and other forms of strife are among the other reasons
During such times, gold tends to hold out the promise as a “safe haven” investment
The other condition is during periods of high inflation
Again, gold is preferred as store of value in such times
The idea to preserve the purchasing power with gold compared to investment alternatives
These are some of the reasons why people prefer gold investments and gold prices rise
Often, when the value of the dollar declines, gold prices rise
Investors prefer "safe haven" commodity to "safe have" currency
India most of the gold is imported and its international trade is denominated in dollars
If the value of the Rupee against the Dollar depreciates, gold prices rise
Very large buying of gold, typically by large institutions like central banks can raise gold prices
Most of the gold price drivers are in action in 2022