Have you ever noticed how the price of gold keeps fluctuating? The gold rate today might rise or decline from what it was last week. Gold buyers and sellers closely monitor these price fluctuations to enjoy the best rates.
But why does the price of gold keep fluctuating? Keep scrolling to find out the factors that affect the gold rate in India.
Demand and Supply
The demand and supply largely influence the gold rate in the domestic market. The price will be higher when the demand for gold exceeds supply. But the price will fall if the demand in the market is lower than the supply of gold.
Interest Rate
The gold loan interest rate in India are monitored and changed by the RBI. It is done to manage the capital flow in the Indian market. In case of higher interest rates, gold sell-off will be heavy. It leads to increased supply which means higher gold rates. But the low-interest rates increase demand and lower gold prices.
Economic Situation
People often invest in gold to hedge against inflation and recession. Any adverse economic factors lead to a fall in the financial market. In such a situation, investors have limited liquidity and more losses. That’s why they invest in gold because its demand increases in the domestic market.
Rupee-Dollar Conversion Rate
If the value of the dollar increases against the rupee, it becomes expensive for India to import gold from international markets. Therefore, the price of gold also rises considerably in the Indian market.
Mathematical Formula to Calculate Gold Prices
The gold rate in India can be calculated using two mathematical formulas depending on the purity of gold. The two formulas to calculate gold prices are as follows:
Purity Method (Percentage)
Gold value = (Gold rate x purity x weight) / 24
Karats Method
Gold value = (Gold rate x purity x weight) / 100
Final Words
You will notice some fluctuations in the price of gold in the Indian market. But it is a lot less volatile than investing in the stock market. Investing in gold also ensures that you can mortgage it and get funds against it in times of need. So check out today’s gold rate and start investing now!
