Free Press Journal

Akshaya Tritiya: Here are the reasons for the rise in gold price



Akshaya Tritiya is round the corner gold demand is likely to firm up, with the rise in rupee and concern over the rising geo-political tension, the price of gold is expected to rise. Currently, gold is trading around Rs 29,500 per grams in the domestic market. With demonetisation, the market had witnessed several ups and downs and over the months the impact of its seems to be fading. With the festive season, 10-15 per cent rise in the footfall is expected. Ahead of the festive season here are five factors that are responsible for the increase in the price of gold.

Global tension
There is an increase in the global tension over the past few months over the French Presidential election and an aggressive US stance on North Korea’s missile test launch. Also, people in Syria, Russia and Iran have already warned US against further strikes in Syria. The global tension has also impacted in the rising of the gold prices globally.

Weakness in the US dollar
With the rise in global tension, gold continues its haven appeal to investigators and has witnessed a rise in the price by 11 per cent. According to the US dollar index, the US dollar dropped by 0.27 per cent on April 17 after hitting close to a four-week high on April 10.

Constant repo rate
The RBI, India’s central banking institution, has kept the interest rates constant at 6.25 per cent for a third straight meeting. As lower interest rates helps customers to save more and more money in hand for investment in gold which will ultimately increase the demand of the metal and hence increase in the price.

Holding of gold reserves
With the holding of gold reserves by central banks of large countries and securing more gold, the prices automatically rises. The gold reserves in India was 557.77 tonnes in the Q3 and Q4 of 2016.

On Akshaya Tritiya 2016, ahead of the festival jewellers were on a 42-day strike across the nation against the one per cent excise levy. The demand was estimated to be around 20 tonnes last year and is expected to be double this year.