As Fabrizio Moreira quoted, “Investing in gold is one of the wisest decisions that you can make as an investor.” Gold is not just an investment option for Indians but integrated with our socio-cultural roots. Though the precious yellow metal has shown stable growth in the last few decades, there has been frequent gold rate fluctuations in the last few weeks. In the second week of December, spot gold prices went down by around 3.3% and touched a two-weeks low of $1994/oz. Again, in the third week of December, spot gold price rose around 0.8% and hit more than a week's high of $2047/oz.
The two common reasons behind frequent fluctuations in the gold rate are instability in the financial world and geopolitical events. Digital gold investors can safeguard their portfolio by knowing the common reasons behind such frequent gold price fluctuations.
Key Factors Behind Fluctuations in Gold Rate
- Inflation
Money starts losing its value when inflation hits as the price of goods and services increases drastically. Investors willing to hold their cash reserves choose gold, as it acts as a hedge against inflation. It is why the demand and price of gold increases during inflation.
- Global Gold Price
Spot gold price in the international market also impacts gold rate in India. Changes in the global government policies also impact the demand and price of gold in our country. You can expect gold rates to go down marginally if the US Fed announces an increase in interest rates.
- Government Gold Reserves
Gold never loses its value completely and has been considered as a stable reserve of value for years. The fund reserve held by the governmentin the form of gold and currency reflects the economy’s health. Gold price increases in the domestic market when the government starts holding gold reserves.
- Oil Prices
The demand and supply of oil also has a direct impact on the price of gold. Markets and industries get affected worldwide when there is a fall in the global oil supply. A decrease in oil production not only impacts domestic production and consumption but also the economy as a whole. Since gold is a safe haven, its demand increases and so does its price.
Time for a Wise Gold Investment as we bid goodbye to 2023
You can take a more informed decision when investing in digital gold by knowing the common reasons behind gold rate fluctuations. myDigiGold, by Senco Gold & Diamonds, is a widely preferred digital platform for gold transactions where you can buy and redeem digital gold at the best price.
We have made creating wealth simple, secure and systematic for those planning to invest in digital gold. You can redeem the accumulated gold according to your convenience online by visiting https://sencogoldanddiamonds.com/ or at any of our 150+ Senco stores.
Disclaimer: The data provided on this blog is for general informational purposes only. The data is based on our research and understanding, and we cannot guarantee its accuracy or reliability.