Factors affecting gold rate

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Published: Thu 14 Jul 2022, 6:16 PM

Last updated: Wed 20 Jul 2022, 6:29 PM

Worried about the current gold rate? Gold is a valuable resource that has been used for centuries as a form of currency. Over time, its value has fluctuated depending on a number of factors. ere are the top five factors that affect the current gold rate.

By Ammar Tarique

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Understanding these factors can help you make more informed decisions about your investments and protect your assets. You can stay ahead of the crowd by learning more about the gold price chart and how gold is priced.

In this blog post, I will be talking about the top factors that affect gold rate.

Factor 1: Inflation

Gold is traditionally seen as a safe-haven investment, and one of the reasons for this is that gold is not subject to inflation. As prices for goods and services increase, the value of paper money decreases. But because gold is a physical commodity with a limited supply, its value is not affected by inflation.

In fact, gold often increases in value during periods of inflation, as investors seek out assets that will hold their value. For this reason, gold can be a valuable hedge against inflation. When the cost of living goes up, the price of gold typically rises as well, providing investors with protection against the erosion of their purchasing power.

Factor 2: Monsoon season and festival season

The monsoon season is one of the most important factors that affect gold prices in India.

During the monsoon season, rains and floods can damage crops, resulting in a decrease in demand for gold. On the other hand, if the monsoon season is good, gold prices will usually go up as farmers have more money to buy gold. The other factor that affects gold prices in India is the festival season. During festivals like Diwali, people buy a lot of gold jewellery for gifts and celebrations. As a result, demand for gold goes up and so does prices. However, during periods of economic slowdown, people tend to buy less gold and prices usually go down.

Factor 3: The weakening dollar

The value of the dollar is one factor that can affect the price of gold. When the dollar is weak, gold becomes more expensive for investors who hold other currencies. This often leads to increased demand for gold, and as a result, the price of gold may rise.

The opposite is also true; when the dollar is strong, gold may become less expensive and demand may decrease. While the relationship between the dollar and gold is complex, it is generally true that a weaker dollar will lead to higher gold prices.

Gold is often seen as a safe investment during times of economic uncertainty, so a weakening dollar may cause investors to turn to gold as a way to preserve their wealth. As such, investors should monitor both the dollar and the gold market to get a sense of how these two factors may affect each other.

Factor 4: Interest rate trends

One important factor is interest rates. When interest rates are low, gold becomes more appealing to investors because it provides a higher rate of return than other fixed-income investments such as bonds.

As a result, gold prices tend to rise when interest rates are falling. On the other hand, when interest rates are rising, gold becomes less attractive because it offers a lower rate of return than other investments. As a result, gold prices tend to fall when interest rates rise. Interest rate trends can therefore have a significant impact on the price of gold.

Factor 5: Jewellery market

The jewellery market has a significant impact on the gold rate. Gold is mainly used in the manufacturing of jewellery. When the demand for jewellery increases, so does the demand for gold. Thus, leading to an increase in the gold rate.

On the other hand, when the jewellery market is slow, the gold rate usually decreases. The reason is, that there is less demand for gold and hence fewer people are willing to pay a higher price for it.

Nevertheless, the jewellery market is just one of the many factors that affect the gold rate. Other factors include economic stability, global events, etc.


The top factors that affect gold rate are many and varied. Some of these factors, like the weakening dollar or interest rates, are beyond our control. Others, like the jewellery market or monsoon season, can influence to some degree. However, it is important to remember that all of these factors are interconnected; a change in one may affect another. As such, it is important to monitor all of these factors when making investment decisions.

Ammar Tarique is the strategist executive at RankHolic.

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