written by | April 25, 2022

How has the Gold Price in India Changed in the Last Decade?

In India, gold investors have made good money during the last ten years. Prices were boosted by a combination of a rebound in worldwide prices and a dropping rupee, resulting in relatively reasonable annualised returns for investors. Now let us take a closer look at gold's historical prices throughout the last decade. In reality, gold has increased by about tenfold over the previous 20 years.

Gold has historical significance and is a favourite option for those looking to protect themselves against inflation. On the other hand, the value of gold fluctuates due to a variety of variables. Despite volatility, the price of gold has risen about 900% in the last decade. 

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If you consider the average yearly gold price throughout this period, 2011 saw the most significant growth. It is experiencing a fluctuating pattern in 2021 but is now exhibiting a favourable gain in price. Several variables influence the shifting pattern of gold prices. 

Variables Responsible for Rate Shifts in Gold

The important variables responsible for rate shifts in gold are as follows:

Rates of Interest

The price of gold is inversely proportional to current interest rates. As interest rates fall, consumers do not receive favourable returns on their capital assets. As a result, they utilise their savings to buy gold to earn a profit. As a result, the hunger for gold rises, as do its costs. As interest rates rise, consumers sell them to put in savings to earn a high-interest rate, causing global prices to decline.

Inflation

Money loses its worth as inflation rises. Furthermore, the majority of investment options fail to outperform inflation. As a result, gold has become more appealing as a haven, and most consumers begin investing in gold due to its threat-free nature.

Also Read: A Brief Overview of Gold Loans

Supply And Demand

Gold, like equities and bonds, is a lengthy investment. As a result, the value of gold, like the share market, is forward-looking and based on anticipated demand and supply. On the other contrary, limited gold mining operations have resulted in a drop in supply over time, failing to satisfy rising demand. Gold prices in the last ten years have increased by about nine times.

Fluctuation in the Value of Currency

In India, Gold is mainly imported and is exchanged in USD on the global market and transferred into INR after importation. As a result, fluctuations in the USD and INR might affect gold import tariffs and its sale price.

Reserves Held By the Government

The Indian government owns gold reserves, and it can make Gold trades through the Reserve Bank of India based on its policy. Its cost will fluctuate depending on how often consumers buy or sell gold. 

The Market for Indian Jewellery

In India, people use gold in religious and marital ceremonies. As a result, gold sales spike during weddings and other joyful occasions, which means more demand and a cost increase.

International Market Fluctuation

India is significantly reliant on gold imports from other countries. Import levies, currency exchange and other factors all influence gold value in India, and these are the most common factors that have influenced the gold price in the last 10 years. Now that we know how factors impact gold prices let's look at the reasons contributing to the current spike in gold prices.

Let's look at gold prices in India last ten years. This is for a 24 karat piece that weighs 10 grams, and prices are estimates and cannot be guaranteed.

Year 

24 karats for 10 grams

2011

₹26,350

2012

₹31,025

2013

₹29,650

2014

₹28,000

2015

₹26,400

2016

₹28,700

2017

₹26,600

2018

₹31,400

2019

₹35,300

2020

₹48,800

2021

₹48,850

From 2011 to 2017, gold prices in India remained virtually unchanged for over six years. There was some marginal progress after that, but the main benefits came in 2020 and 2021 when we discovered Covid-19 viruses. Because gold is a safe harbour investment, traders flocked to it, causing global prices to rise. Gold for 24 karats in India reached a high near ₹ 54,000, following which it began to fall.

The dramatic growth in gold prices over the previous two years has resulted in less investment in gold, and gold demand has decreased significantly in countries such as India. Covid-19 instances have also shaken the physical market in recent years. Investors worldwide are still interested in gold ETFs, which may see fair needs in the future.

What Does the Future Hold for Gold Cost?

With the expensive metal's recent climb, it's doubtful that we'll see any significant shift. We believe that the precious metal will experience a lengthy period of stability. A trigger, such as geopolitical stress or a COVID, is required for gold to rally. Surprisingly, the world economy is picking up speed, which is excellent news for stocks but bad news for gold. There are currently no triggers for a large rally of gold in the near to medium term.

The fluctuation of gold is heavily influenced in India by the rupee's exchange rate against the dollar. When the rupee falls versus the dollar, gold prices rise. The Indian government promised a reduction in gold import tariffs in its Union Budget plans for the current year. The government declared a decrease in gold and silver customs duties from 12.5% to 7.5%. Because India imports most of its gold, the duty reduction resulted in lower gold prices.

Why Is Gold Getting More Expensive?

The recent spike in gold prices has piqued the interest of investors. This increase in gold value, according to specialists, is due to several variables. To find the answers, we'll look at four reasons why gold prices have climbed in recent days.

The Slump in the Economy

The interest rate fell as global economic uncertainties increased. Decreased interest rates spurred uncertainty among investors to cash in their savings and buy gold. Consumers see it as a safe refuge in times of financial turbulence. Gold's appetite, and thus its price, skyrocketed due to this.

Dollar Value Is Low

One of the factors for rising gold prices, according to economists, is a weakened US currency. Gold determines the global dollar's worth. As a result, any decrease in the dollar's value enhances the value of gold, and conversely, as previously stated. Any drop in the dollar's value raises the value of other international currencies. This increases demand for goods and services, which helps to drive up inflation. Furthermore, with the value of the US dollar plummeting, traders are turning to gold as a haven from growing inflation.

Reduced Gold Mining

The link between demand and supply is one of the essential elements that cause gold prices to grow. The financial meltdown has decreased gold mining activity in many nations. As a result, even as gold prices rise, supply falls, leading gold prices to climb.

Also Read: Top 10 Gold Loan Companies in India

International Prices are Increasing

Gold prices have risen due to the US-Russia confrontation, rampant prices in the US, and the country's QE scheme.

Is Now a Good Time to Invest in Gold?

Many analysts believe that now is a good moment for investors to purchase gold and keep it for the mid to long term. However, given the current state of the economy, concluding is challenging. However, eager investors can use internet platforms, making investing in digital gold more accessible to investors. Because digital gold is online, it aids in hedging market volatility and rising inflation. Your stock portfolio will be more diverse as a result of this.

So, should you put your money into gold? It is entirely dependent on market conditions. If the economy improves, the price of gold may fall, forcing you to seek alternative investment opportunities. On the other hand, trading in gold is a good deal if the market sustains economic stagnation and low-interest rates. Now with Khatabook app, you can acquire digital gold and invest in it securely.

Conclusion

According to research, with rare exceptions, the gold price has traditionally risen in the last ten years. As a result, traders flock to it as a haven from economic turmoil. On the other hand, online platforms make it possible for customers to trade in digital gold. The essential advantage is that one can transfer digital gold at any moment at the current rate, resulting in a better return if done promptly. It also protects against inflation and other external influences at the same time. 

Much would rely on gold prices in international markets, where increasing bond rates and fluctuating inflation in the United States represent a massive threat to gold prices. Overall, if you want to purchase gold, you should do it only on falls since there may still be some downside. When it comes to intake purchases, you have no option but to make a purchase.

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FAQs

Q: Is it the right time to invest in gold?

Ans:

Many analysts believe that now is a good moment for investors to purchase gold and keep it for the mid to long term. However, given the current state of the economy, concluding is challenging.

Q: What does inflation do to the value of gold?

Ans:

Gold loses its worth as the rate of inflation rises. Furthermore, the majority of investment options fail to outperform inflation.

Q: What can consumers do to gain a profit?

Ans:

Consumers do not receive favourable returns on their capital assets as interest rates fall. As a result, they use their savings to buy gold to earn a profit.

Q: What is the relation of the gold price with current interest rates?

Ans:

The price of gold is inversely proportional to current interest rates.

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