Gold is considered as a safe haven and any turbulence in the global markets increases the demand for the precious yellow metal, thereby pushing its price upwards. In the beginning of the year, gold in India was hovering at a price of around Rs. 28000 per 10 grams. But on Monday, tracking global events gold in the domestic market rose to this year's high of Rs. 30,600 per 10 grams. Increased demand from local jewelers also boosted price of gold.
Here's what moved the price of gold higher
1. Investors took position in gold perceived to be safe: Due to increasing tension between the US and North Korea, more and more investors took positions in the yellow metal deemed to be a safe haven. The gold price in the US moved to their highest level in a year, spot gold was trading at $1,339.47 on Monday, which is the highest price since September last year.
2. Dollar rupee value another determinant of domestic gold price: A weaker dollar has also moved the gold prices higher, so the dollar-denominated gold becomes cheaper for individuals having other currencies, another boost for gold demand. Only recently, the US dollar against a basket of major currencies fell to the levels of 90, its lowest value since January 2015.
3. US Federal Reserve unlikely to bring about any rate hike on an immediate basis: Domestic gold prices track global prices very closely as it majorly meets all its gold requirements through import. Any rate hike has a direct bearing on the dollar value in a positive way which boosts bond yields and as a result gold prices are put under pressure. So, as of now with no interest rate hikes expected in the near term, gold prices are set to increase.
4. Global gold prices to increase further: Analysts and experts are of the view that globally gold is likely to see an upward trend in price. Weaker dollar is also supporting gold that is likely to increase in price in the coming days.