Factors Affecting Gold Prices: What Every Consumer Should Know?

gold price factors

India is the 2nd largest consumer of gold globally, taking the adage 'Gold is money. Everything else is credit.' quite literally! No ritual in the country is complete without the shimmer of gold, leading to a surge in gold buying during festive and wedding seasons.

But What Makes Gold So Valuable?

Gold has been a symbol of wealth since ancient times, from kings' reserves to modern-day bling, it's always been the star of the show. It's like the granddaddy of all currencies, reminding us that sometimes, the classics never go out of style. Also, it holds spiritual significance and makes wonderful jewellery loved by women nationwide! And yes, it's not just for flaunting around your neck or on your finger—it's also got its own gig in tech with its appeal lying in its ability to retain its value over time and its diverse applications in jewellery and technology

Why Do Gold Prices Fluctuate? 

Are you one of those who wake up to the search results of gold rates today and wonder why they fluctuate every day? The price fluctuations of gold are influenced by various factors, rather than a singular cause of supply and demand. Hence, to determine the best day to buy gold, we need to delve into the roots of Indian psychology behind such a high demand for gold: 

1. Consumption Demand

Gold holds a central position in India's culture, symbolizing wealth, status, and tradition. It's not just a commodity but a cornerstone of rituals and celebrations, particularly in marriage ceremonies. Rural communities value its portability and security, making it a preferred investment option. According to the World Gold Council (WGC), weddings alone drive about 50% of India's annual gold demand.

2. Import Duty 

Any alterations in import duties have a significant impact on the pricing dynamics of gold in the country. This demand-supply relationship is finely tuned, and even slight adjustments in import duties can lead to noticeable fluctuations in gold prices, influencing consumer behavior and market trends.

3. Interest Rates 

Gold prices and interest rates have an inverse relationship. When interest rates decrease, the demand for gold typically rises, while a decrease in interest rates tends to lower the demand for gold.

4. Protection Against Volatility

Many consumers turn to gold as a hedge against volatility and uncertainty, viewing it as a safe haven asset. This preference for physical assets, especially during times of economic instability, is widespread among Indian households. Regardless of whether the economy is booming or in recession, gold remains a popular choice for investment. For example: During periods of economic uncertainty, such as the COVID-19 pandemic, the price of gold tends to rise as investors sought to minimize portfolio risks by shifting towards gold investments.

5. Inflation

Gold acts as a hedge against inflation, with its price responding to changes in inflation rates. Generally, the value of gold tends to increase when the cost of living rises. As inflation climbs, the value of currency declines, leading individuals to seek refuge in gold as a store of value.

6. The Rainy Season 

In rural India, where 60% of gold consumption occurs, the demand for gold is significantly influenced by the monsoon season. favourable monsoon conditions allow farmers to invest in gold using their earnings, thereby creating assets. Conversely, during periods of deficit monsoon, farmers often sell their gold holdings to raise funds.

7. Rupee-dollar Equation

While the rupee-dollar exchange rate doesn't directly affect global gold prices, it does influence Indian gold rates. Since gold is primarily imported, a weakening rupee against the dollar tends to drive up gold prices in rupee terms. Conversely, a depreciating rupee may dampen demand for gold in India. However, it's important to note that changes in the rupee-dollar rates do not impact gold rates denominated in dollars.

8. Government Policies And Regulations

Government policies wield considerable influence over the gold rate in India. Alterations in import duties, taxes, or restrictions on gold imports can trigger fluctuations in gold prices. Given that gold serves as a hedge against inflation, government policies pertaining to inflation can also impact the gold rate. Staying informed about government announcements and policies is crucial for those monitoring the gold rates. 

9. Performance Of Other Markets

The performance of other markets, like the equity and currency markets, holds significance in gold price forecasts. In times of negative price movements in these markets, investors often turn to gold as a safe haven. This increased demand can drive up and the gold rate today would eventually increase. 

10. Low Supply 

Each year, approximately 2,500,000 to 3,000,000 kilograms are added to the overall stock of gold above ground through mining. However, this amount often falls short of meeting global demands. Unexpectedly low supplies, such as miners finding less gold than expected, can further drive up gold prices. Currently, it is estimated that only about 20 percent of gold remains to be mined, although this figure is not definitive. Advancements in technology may enable miners to extract gold from previously overlooked sites that were deemed economically unviable.

Did You Know? 

Throughout human history, we've managed to mine a staggering amount of gold – nearly 198,000,000 kilograms! That's enough shiny stuff to fill a cube roughly 21 meters in length and depth.

Benefits of Buying A Gold Coin 

1. Low Maintenance: Gold coins require minimal upkeep, allowing you to store them safely for the long term. When you're ready, selling them offers the potential for excellent returns, securing your family's financial future hassle-free.

2. Easy Buying and Selling: Investing in gold coins is straightforward compared to ornaments. Available in various weights and purity, they can be purchased without worrying about making charges. Additionally, their high demand ensures easy selling, and they can even be mortgaged for funds.

3. Inflation Protection: Gold coins serve as a hedge against inflation, outperforming inflation rates and reducing your investment risk significantly. Many see them as an alternative to currency during market downturns due to their stability compared to other assets.

4. Wealth Preservation: Gold coins offer a reliable means of wealth preservation across generations, unlike liquid cash. With their enduring value, they present a prudent investment choice in contrast to paper currencies.

Factors to Consider Before Purchasing Gold Coins

If you've decided to invest in gold coins, here are some factors to consider:

1. Purity: Verify the purity of gold coins before investing. 24-carat gold coins contain only gold, while 22-karat or 18-karat coins include other metals like zinc or silver, affecting their price.

2. Hallmark: Always check for the hallmark on gold coins as a sign of authenticity. Avoid investing in coins without proper hallmarking.

3. Weight: Consider the weight of gold coins before purchasing. Different weights, such as 1 gram, 5 grams, or 10 grams, are available, with prices varying accordingly.

Each coin is BIS Hallmarked and comes with a certificate of authenticity, guaranteeing top-notch quality. Shop confidently knowing that every purchase is backed by our commitment to authenticity. Plus, enjoy a 15-day hassle-free return and money-back guarantee. 

There's no better time to explore our exquisite collection. Shop now and make a timeless investment with Angara.


1. How does inflation affect the price of gold?
Inflation erodes currency value, prompting investors to seek gold as a hedge, driving up its price.

2. How does the economy impact the price of gold?
Economic indicators influence central bank policies, impacting gold prices. Strong economic growth tends to push gold prices lower, while weaker economic indicators can increase gold prices.

3. What are the main factors that influence gold prices?
Various factors, like inflation, economic data, demand-supply dynamics, and currency movements, collectively influence gold price fluctuations.


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