The month of August is witnessing the lowest gold price in India in the last 4-months. This has led to some questions regarding the movement of the precious metal in the near term. Gold has always been considered to be a safe haven for investors in the long term. Last year proved a boon for gold investors, as the precious metal rallied on the back of the Covid-19 outbreak, as investors turned risk averse. Now prices are going down again, it is giving hope to the investors to put money in gold.
Gold prices in India have been static on 11th August from yesterday at Rs. 4528 for 22 carat gold and Rs. 4628 for 24 carat gold. Most of the gold jewelry is made with 22 carat gold because of its better durability. In addition to that price, gold jewelry consists making charges and GST.
Gold price fluctuation chart in India
In India, prices started to fall on a daily basis since 31st July this year. August has seen a consistent fall in the prices. Only on 5th August prices saw Rs. 20 hike than its earlier day in 10 grams gold. Other than that period the gold prices fell sharply.
In Bangalore, the price for 22 carat gold is Rs. 43,350, in Mumbai, it is Rs. 45280, in Kolkata, is watching one of the highest prices at Rs. 45700 and in Delhi, it is selling at Rs. 45500. In most of the cities on 7th August, the gold prices fell around Rs. 1000 per 10 grams. Since then gold rates did not give any sign to be up. On 30th and 31st July, the prices went highest in recent times at Rs. 47380 for 10 grams 22 carat gold.
Why did the rates go down-field?
It all began on Friday last week, as the employment and wages data was out by the labor department in the USA, it showed that the country's economy is getting better momentum. This triggered investors to think that the US Fed Reserve might taper the stimulus that earlier helped gold to reach higher in 2020. Investors started to fear that the commodities might lose sheen and investors may prefer Government. bonds. This led to international gold prices spiralling downwards, impacting Indian gold rates negatively.
In the global markets, before the employment data, gold was trading at $1816 an ounce, but, in the last 3 trading sessions has now fallen to $1730 an ounce. Interestingly, the CPI data in the US is due later today and if this points to inflation worries, bond yields will rally and push gold prices further lower.
Thus, much of the movement of gold depends on inflation, bond yields, economic growth and movement of the US dollar against a basket of currencies.
Dropping gold rates always creates ground for the investors to put more money in the yellow metal. Additionally, the recently issued sovereign gold bond scheme - V by the RBI is also giving one more opportunity to invest in gold now, at lower prices. No further economic development can keep the gold prices low in August in India.