Gold Prices have experienced a major increase in the current year. The rate of gold futures, which was approximately 31,500 per 10 grams at the beginning of the year, has gone up to 38,000 within a period of eight months. Considering the whopping rise in the gold futures prices, it won’t be wrong to say that gold prices have broken the record this year. It has seen an increase by as much as 20% in 8 months. If you check the prices of gold futures in the spot market, you will notice how the rates of this exclusive commodity have reached up to 38,470 per 10 grams.
Considering the fact that India imports a major portion of the gold from the International countries, the common factors that drive the prices of this commodity are the Rupee-dollar rate as well as import duty. The surprising fact is that gold prices have seen a major rise in foreign countries as well. According to recent reports, the global rate of gold has crossed $1,500. Let’s have a quick look at the reasons why gold prices have witnessed a massive rise this year in India.
- The War Between China and the United States
One of the main reasons that have driven the gold prices this year is the constant tension between China and the United States. In spite of several proposals and negotiations, the two countries couldn’t come up to a conclusion. As a result, the trade war between China and the US escalated.
Donald Trump, the president of the United States, have made it very clear that he is not willing to make any deal and negotiations with China. The constant war escalation between the two strong economies has pushed the gold prices up. Even though the gold prices have already witnessed sharp gains, the analysts are expecting further increase in the rates.
- Increased Import Duty
The Indian government had declared an increase in the import duty for gold in the month of July this year. Gold, the import duty for which was 10%, has now increased to 12.5%. As India is one of the major importers of gold, the rise in import duty led to an increase in the gold rates.
- Lower Interest Rates
The escalating war between the US and China have made analysts anticipate a drop in the US interest rates. As the rates of interest go down, the price of metals like gold increases. Recently, the US reduced its interest rates by 25 basis points. As per the analysts, this ongoing trade war between the two powerful nations will result in a further decrease in interest rates (increasing the gold prices).
- Global Slowdown
The US-China tariffs can result in the global slowdown. It can negatively affect the supply chains, weaken investment, and slow down the overall growth of the nations. Gold is considered one of the safest commodity trading options in the unpredictable times, increasing its demand and thus, the rates.