Konidena Pavan Kumar
What
Drives
Gold
Prices
In India?
Why do gold prices rise and fall? Here are the key factors you must know!
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History & Evolution Of Gold
Gold has been valued for over
5,000 years, first used in
ancient Egypt (3000 BC) for
jewelry and trade. The Romans
(100 BC) introduced gold coins,
later influencing global
commerce. The Gold Standard
(19th century) linked currencies
to gold but ended in 1971,
leading to fiat money. In the
21st century, gold remains a
key investment asset, with ETFs,
central bank reserves, and
geopolitical factors driving
demand. On March 20, 2025,
gold hit a record high of
$3,050/oz, reinforcing its role
as a safe-haven asset amid
economic uncertainty. Its
future includes digital gold and
tokenization.
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Global Gold Prices
How International Markets Impact Indian Gold Prices
Indian gold prices track global bullion rates
(London Bullion Market, COMEX).
March 20, 2025: Gold hit $3,050/oz, driving Indian
prices up.
Factors like U.S. Federal Reserve policies, inflation,
and global demand influence prices.
Why It Matters?
A rise in global gold prices increases import costs
for India.
Higher inflation & geopolitical risks push investors
toward gold, making it more expensive.
Central banks buying more gold further drives
prices up.
Key Takeaway:
Global trends dictate India’s gold rates—stay
updated!
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USD-INR Exchange Rate
Impact of Rupee Fluctuation on Gold Prices
India imports 90% of its gold, so the USD-
INR exchange rate plays a crucial role.
A weaker rupee increases gold prices as
more INR is needed to buy the same amount
of gold.
Example:
If INR depreciates from ₹82 to ₹85 per USD,
gold prices rise due to higher import costs.
In contrast, a stronger rupee lowers gold
prices by making imports cheaper.
Key Takeaway:
Keep an eye on rupee movement—it directly
impacts your gold investments!
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Inflation & Intrest Rates
Sebastian Bennett
Gold as an Inflation Hedge
Content Creator
When inflation rises, the value of money falls, leading
investors to gold as a safe-haven asset.
Higher inflation → Higher gold demand → Rising gold
prices.
Interest Rate Impact
RBI’s interest rate decisions influence gold demand.
Higher interest rates make fixed-income assets (like
bonds) more attractive, reducing gold demand.
Lower interest rates push investors toward gold,
raising its price.
Example:
In 2023, when inflation hit 6%, gold demand in India
rose by 10%.
Key Takeaway:
Gold thrives in high inflation, low-interest
environments!
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Central Bank
Sebastian Bennett
Gold Reserves
Content Creator
How Central Banks Influence Gold Prices
When central banks buy more gold, global prices
increase due to higher demand.
Countries like India, China, and Russia
accumulate gold to diversify reserves and hedge
against currency risks.
Example:
In 2023, China & Russia bought over 1,000 tons
of gold, boosting prices worldwide.
The RBI also increased gold reserves, impacting
domestic prices.
Key Takeaway:
More central bank gold buying = Higher gold
prices!
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Demand
Sebastian Bennett
& Supply in India
Content Creator
Festivals, Weddings & Cultural Demand
Indian is the world’s second-largest gold
consumer, with demand peaking during Diwali,
Akshaya Tritiya, and wedding seasons.
Higher demand → Higher prices, especially in peak
buying months.
Example:
Akshaya Tritiya sees a 20-30% spike in gold sales
every year, driving up prices.
Seasonal demand often overpowers supply,
causing short-term price surges.
Key Takeaway:
Gold prices in India aren’t just about global rates—
festivals & weddings play a major role!
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Geopolitical & Economic Uncertainty
Sebastian Bennett Content Creator
Crisis & War Impact on Gold Prices
During wars, recessions, or financial crises,
investors rush to gold as a safe-haven asset.
Stock market volatility & global tensions drive gold
prices higher.
Example:
The Russia-Ukraine war (2022) led to a 15%
surge in gold prices.
In March 2025, gold hit $3,050/oz amid economic
uncertainty and central bank buying.
Key Takeaway:
Gold thrives in uncertain times—higher risk =
higher prices!
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• Konidena Pavan Kumar
