Athira Sethu
Kochi, 29 October 2024
Gold has been shining this year depsite higher prices of the yellow metal. The gold price has gone up by a little over 24% this year. Despite this, several buyers are still interested, especially with the volatility seen in the markets and rising tensions in politics.
However, the uncertainty in the conditions of the economy is taking a toll on the purchases, which are being done with considerable caution, according to a report from Religare.
In India, for instance, gold is among the most sought after commodity during Diwali-the festival of lights. People generally purchase it traditionally in jewelry, coins, or bars forms. But high price of the yellow metal is denting the sentiments of retail buyers.
However, investors are bullish on gold. One of the major reasons that gold remains popular is due to geopolitical instability. Conflicts in the Middle East region, added with high oil prices and outflow of FIIs from India, have pushed more people to consider gold as a safeguard against inflation.
Moreover, the Reserve Bank of India has allowed the rupee to depreciate in a controlled manner, which enhances demand for gold as protection against these economic issues.
This surge in demand for gold is also happening with higher demand from all of the world’s central banks. As indicated by the World Gold Council, the global reserve grew by 290 tonnes during the first quarter which was the highest increase ever recorded over two decades. China’s central bank has emerged as one of the biggest consumers. The Reserve Bank of India has also diversified its portfolio by buying more gold.
Another reason is that the U.S. Federal Reserve recently reduced interest rates by 50 basis points, which makes gold more attractive. The lower interest rates make holding gold, which does not pay interest, less expensive and therefore more attractive to both individual and large investors.
The price surge of gold has brought the current prices close to Rs 79,800 per 10 grams.
