Supply & Demand
Supply and Demand is the most common factor that affects the price of any item. All the gold that has been mined is still accessible in the world today.
The supply of gold is not very high since not a lot of gold gets mined every year
As the demand increases the price will also increase since gold is so scarce.
There is an inverse relationship between inflation rates and the value of the currency.
As inflation rates increases the value of the currency will then decrease.
Most people turn to gold as an investment since it is a hedge against inflation
Gold is not influenced by the shift in the value of the currency while other investment option do not delivery inflation beating return.
Gold prices and interest rates also have an inverse relationship. As interest rates fall return on deposits also fall. People are more likely to then sell their deposits to buy gold which then increases the demand which leads to an increase in price for gold.
The opposite happens when interest rates increases. People will then sell their gold and rather invest in a deposit and earn a higher interest rate the affects thereof is the drop in demand for gold and the decrease in gold price.
Indian Jewellery Market
In most religions in India Gold jewellery is essential during festivals and wedding seasons. This leads to an increase in demand which leads to an increase in the gold price.
Even though India contributes less than one percent of the global gold production they are the second largest consumer. India imports a lot of gold to meet its high demand consequently import duty plays a crucial role in the price of gold.
Gold is traded in USD in the international markets and importing USD is transformed into INR (International Normalized Ratio). Currency fluctuations such as a shift in the USD or INR will influence the import price of gold as well as the selling price thereof.
A look at how the price of gold & silver has increased this Century alone, which shows that it is a fantastic investment option.
Graph representing the price of gold in ZAR/Oz from 2002-2020
Graph representing the price of silver in ZAR/Oz from 2002-2020