Gold has not only been a symbol of luxury but also a sign of fiscal stability for time immemorial. Gold prices have been on an upward trajectory for the past few weeks globally. And a reflection of that needless to say is being observed in India as well. In this part of the world, the yellow metal is not just an investment, but is a component with a great amount of cultural and emotional tangibility.
Gold Prices Jump 17% In 6 Months
Therefore, a change in their price, in this case, a rise is bound to have an impact, not just in consumption, but the management of fiscal activities at large.
The current price of 10 grams of 24-carat gold is estimated to be Rs 76,215 in the city of Mumbai. This is up from Rs 65,090 for 10 grams in December 4, 2023. Just in the span of six months, the price of the precious metal has zoomed 17.09 per cent.
This is understandably being attributed by many to the rise in demand for gold. And here over the past few quarters, an interesting trend has been observed around the globe. Instead of an increase in demand for gold ETF (Exchange Traded Fund).
A gold ETF is a type of investment fund that holds gold assets, but in the form of such as gold and silver or futures contracts, and is traded on the stock exchange. Here, it is to be noted that the price of the ETF is directly linked to the price of gold. The practice is similar to buying any stock(s) of a listed company on the market.
This historic high is being largely attributed to looming uncertainties around the globe. | Representational Image
China Buys 27.06 Tonnes In 3 Months
This historic high is being largely attributed to looming uncertainties around the globe. This stock-piling sped up during the Russia-Ukraine war, as fears of inflation due to a rise in fuel prices along with supply chain disruption enveloped the minds of not just individuals, and investors, but also central banks.
Yes indeed, many central banks, amidst rising uncertainty and conflicts have started stock-piling gold, in order to create a bulwark for their economies. Central Banks across the board, including the People's Republic of China's Central Bank have accumulated significant amounts of gold over the past few years. Just in the first quarter of 2024, the Chinese central bank bought 27.06 tonnes of additional gold, to its existing supply.
As a result of this, many in the US itself are trading their priced dollars for the yellow metal. This, as close to 1000 metric tonnes worth of gold has been consistently sold over the past three years, starting from 2021 to 2023. | Image Source: Wikipedia (Representative)
Central Banks Stock Gold
This is being done by China and other central banks to diversify their resources in uncertain times. Another factor that comes into play is gold's agility, for unlike the US Dollar, which is the world's reserve currency (which comes under the US government and US Fed), does not come under the jurisdiction of one particular nation.
As a result of this, many in the US itself are trading their priced dollars for the yellow metal. This, as close to 1000 metric tonnes worth of gold has been consistently sold over the past three years, starting from 2021 to 2023.
As the Ukraine War, along with rising tension in the Middle East not showing any signs of budging, the possibility of demand for gold and prices rising are highly likely. This eventually will make the non-ferrous metal out of reach for many common Indians
