Gold Rates Fluctuation – Why Gold Is on a Roller Coaster Ride

In India, a popular investment option is gold. In the case of any financial crisis, investment in gold is considered as secure. Gold prices fluctuate on a regular basis and depend on several factors such as geopolitical tensions, the value of the rupee against the dollar, demand and supply.

So why do gold rates fluctuate? Here are some reasons which could shine some light on this:

• Currency Changes - The value of the rupee against the dollar affects the prices of gold in India. Any changes in the value of the rupee will impact the import price and will change the price at which the yellow metal is sold.
• Import Duty - The demand for gold in India is high and any changes in the import duty will affect the prices of gold.
• Interest Rates - Gold rates and interest rates are inversely proportional. The demand for gold increases when the rate of interest falls. The demand for gold falls when interest rates are reduced.
• Inflation - Currency falls when inflation rates increase. Gold acts as a safe haven in the case of inflation.
• Demand and Supply - Gold prices are affected by demand and supply of the yellow metal. Gold rates increase if demand rises.