Why is the gold price increasing, and how will it affect India?

image of gold bars

Gold is one of the most precious metal. In India, it’s not just a yellow metal; it’s a tradition. We use gold in jewelry for cultural events and functions like marriage and parties.

In recent years, it has become a very profitable assets. Compared to other assets, gold offers very attractive return. Recently, the price of in the market has increased significantly. It’s like a trend in recent years that gold maintaining it’s value.

Let’s, explore the reasons behind the surge in gold prices and how the price of gold has been increasing in recent years.

Gold price increase in recent years

DATE24K (99.9) GOLD22K (91.6) GOLD
MAY 202472500 (INR)67000 (INR)
JUNE 202359800 (INR)54800 (INR)
APR 202252500 (INR)47650 (INR)
APR 202148350 (INR)44300 (INR)

Reasons behind the increase of gold price.

image of why gold price is increasing

In recent years the price of gold in India has skyrocketed, rising by over 50% or above compared to the previous five years. several reasons within the Indian market contribute to this surge. Domestic demand, such as Government policies and currency exchanges play a vital role to increase the price of gold. Additionally there are some other reasons for this increase.

1.International Market

how dollar affect gold price

The international market plays a significant role in determining the price of gold in India, especially factors like U.S. Dollar . In the Indian market, the strength of dollar makes a strong impact on price of gold. When the dollar is stronger, gold becomes more expensive compared to other currencies due to exchange rates. Conversely, when the dollar is weaker, the price of gold becomes less expensive compared to other currencies.

2.Interest rate

Gold and interest rates have a negative correlation between two. When interest rate goes up, the price of gold usually go down. This happens because rising interest rate make stocks, bonds and other investments more attractive to investors. But when the interest rates are low , those stocks and bonds aren’t as attractive. So, people turns towards gold as a safe heaven assets to protect their money during tough economic times. So, when interest rates down, more people buy gold, which drives up its price.

3.Domestic Demand

gold jewelry

In India gold plays very significant role in tradition and cultural events, it is an essential element in Indian customs and tradition. On occasions like weddings and Diwali gold considered a symbol of gift-giving and personal adornment. Both gold coins and gold jewelry are a popular choices for gifting and self purchase during these occasions. Many people seek to purchase gold jewelry in these special occasions as a timeless investment and celebrated the traditions associated with weddings and Diwali. However the changes in government policy and currency exchange make people to purchase gold as a stable and reliable store of value. As these are the factors contribute to drive up the demand for gold in India.

4.Geopolitical Factors

Geopolitical factors play a crucial role to increase the price of gold. There are several reasons why geopolitical tensions can affect the price of gold. When the geopolitical tension rise, investors become nervous and seek to protect their money. They often choose to invest in gold because it is considered safe and stable.

In recent times, conflicts such as Israel-Hamas and Russia-Ukraine war have made other investments like stocks and currencies unstable and unpredictable. So, people often to choose gold because it’s a safe-haven asset, as it is less likely to lose its value during these times. Geopolitical tension can make the value of currency down. But gold’s value doesn’t depend on any one country’s currency, allowing it to maintain its value even when the value of currency down.

So, when geopolitical tensions rise, so does the demand for gold, which drives up its price and makes it perform better as an investment.

How gold expected to perform in India?

demand for gold is expected to grow

The rise of gold prices is based on the internal and external factors. Internal factors such as currency exchange, government policies, domestic demand like cultural events and investment purpose amplifying its price. Conversely externally, the performance of gold in India closely connected with geopolitical tensions, currency exchange rates, fed rate cuts, international gold prices and global economic conditions.

considering these are internal and external factors, ultimately determines the performance of the price of gold in India.

Know more: why gold price is increasing in India


These factors significantly affect the gold price in India, and it is expected to increase in the future. Many analysts believe that the price of gold will continue rising in the coming years. If you are considering investing in gold, it’s essential to look beyond the short term and consider the long-term trends. The price of gold is expected to rise in the coming years, making it a potentially profitable investment option for those with a long-term investment perspective.

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