Gold price in India is hitting a high bar of Rs 52,435 per 10 grams which means a 5% price increase for seven weeks in a row. Around 1500 per 10 grams were increases in just two days.
The incredible rise in the gold price has forced the Indian families to rush to borrow against their jewellery as the expensive metal renewed to record. Because of which the financial firms and banks are using to allure more customers from brokers and moneylenders. And not just gold, silver prices to have been soaring. Silver touched an 8-year high of Rs 67,560 per kilogram.
But the question arises why the prices of gold are hitting so high when the whole world is facing an economic shutdown due to the Coronavirus pandemic. Well, gold is a very unique product whose supply has not increased very much over the years.
So, when there is an economic strike, high reflection, declining currencies, a fall in stock markets and other investment options, investors are known to congregate to gold to use it as a windbreak on inflation. The RBI too indicated the same in its last Monetary Policy report where it said that gold prices move fast with intensified economic policy uncertainty.
Over the years, the gold has positive price resiliency, which means that more people will buy gold and that will increase the demand to which the price also increases. Right now the central bank of many countries is cutting interest rates to put more money in the hands of people.
It is believed that liquidity in markets always assists in the increase in gold prices. Even lower interest rates mean lower returns on investments. whenever there is an economic difficulty, the gold price will always increase.
Article Written by Dikhya Mohanty
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