The rate of gold is right now hovering around 60000 per ten grams. There is a talk and also predictions from the analysts that it may reach one lakh in the coming years.
Gold, due to its almost steady character as compared to currency, holds significant value and is used to hedge inflation. This is why investors prefer to hold gold rather than currency
Indians love their gold jewelry. Be it festivals or birthdays, gold jewelry holds a special place in Indian households. During the wedding season and also during festivals like Diwali, gold prices go up as a result of increased consumer demand. The demand-supply mismatch leads to raised prices.
The bottom line to keep in mind is that no matter how numerous the factors affecting gold rate may appear, ultimately it all boils down to the demand-supply game. The basic demand-supply mismatch is one of the primary reasons that drives the price of the yellow metal.
The demand for gold does not just end at jewelry requirements. The metal is used in small quantities by various electronic companies for the manufacturing of devices like television, computer, GPS etc. In India, gold is used for jewelry requirements, as a gifting article, for showing off wealth as well as a strong hedge against rising inflation.
These combined make the domestic demand for gold rise so much that India has to time and again import huge quantities of yellow metal. The industrial demand for gold accounts for 12% of the total demand for gold in the country.
As a result, when inflation is high, the demand for gold increases and vice versa. The price of gold will then shoot up as a result of high demand from customers. This holds true for both international inflations as well as that which occurs in India.
