India is considered to be the second-largest consumer of gold in the world after China. Gold carries a huge sentiment in India. It is part of the culture and traditions of Indians. It is looked at as a form of wealth and prosperity. When we observe the Indian side of the gold market, taking a closer look at gold’s price in the Indian rupee is necessary. When the price of gold is analyzed, many investors observe the performance in terms of the US dollar. Although there is a good reason why investors do that, it is because the dollar is the world’s most powerful currency. However, despite the dollar’s strength, it’s not the currency that most of the investors across the globe use on a day to day basis or to purchase gold. Also, if we look at the performance of gold only in terms of the dollar would be greatly narrowing one’s point of view, and limiting the odds of success.
The USA is ranked the third biggest consumer of gold but that is less than one-fourth of the Indian gold consumption. Therefore, Indian gold buyers have a big influence on the fundamental situation of gold to a great extent. Therefore, if you are using the Indian rupees to purchase gold, you don’t have to worry about a decline in value. The safe-haven metal gains momentum during the political and global uncertainty, as investors move away from risky assets to benefit from the gold. The yellow metal has always acted as a way to make a profit or hold a potential profit for the future when prices move towards a high rise. The purchase of gold as a safe haven gives investors a financial boost when stock markets are unstable.
The New Year 2020 welcomed in several political and global uncertainties that have boosted the prices of gold in the Indian market in a positive direction. One of the tensions was the political conflict between Iran and the USA on the airstrike that was ordered by the President of the US Donald Trump that killed the Iranian Commander General Qasem Soleimani which outraged Iran. The price of gold surged high during this incident and due to the dollar depreciating, gold saw many weeks of increasing demand. The recent spread of the Corona-virus in China that has become a threat globally infecting over 1000 people and killed close to 400 people have pushed investors to move towards the safe-haven metal from risky commodities and assets.
Prices have gained momentum and the domestic gold market has recovered from the previous year.
Investing in gold provides bigger profits in the long run because of its considerable stability in comparison to other forms of assets. It is during this period that people and investors invest in gold as an immediate reaction to political turmoil which leads to increased demand and price. Stocks and other commodities in the markets perform poorly during uncertainty periods which provides support to the bullion. Towards the end of 2019 and to the beginning of this year, there have been political tensions in terms of trade settlements, conflicts and various global strains that gold has benefited from, the demand of gold is expected to keep growing in India as the events haven’t predicated any changes anytime soon. Also with the budget 2020 to 21soon to be released, will play a role in the boosting of the gold markets in India as the government of India is expected to initiate policies such as the hallmarking of gold, the reduction in gold import duties and many more to help boost a positive performance in the domestic market.
Prithviraj Kothari Is the Author of this Article. Find more Information About Prithviraj Kothari.