Prices of Gold are at the historic highs. In India, the gold touched ₹35,960 per 10 grams—a 6-year peak—on Tuesday. the factors including US-China trade spat, President of US Donald Trump threatening to attack the Iran for pursuing its nuclear programme and the busy Hindu wedding season that have driven prices of bullion to the record levels.
What are the benefits offered by gold?
Yellow metal offers those who invest in its long-term safety net with regard to the wealth. This is mainly because it is hard to imagine price of yellow metal ever going down to 0, dissimilar an equity investment. It is also simply tradable, unlike other physical assets such as the real estate. In India, major consuming country of precious metal, people store yellow metal to meet large, long-term as well as emergency wants. Being a global commodity, whose prices are set internationally, gold has international acceptance, making it easier for people to trade in it across limits. It serves as a hedge against inflation in long term.
What are the factors that influence gold prices?
Yellow metal, long considered a safe haven and defensive investment in times of international uncertainty, offers avenues for both old-style and new-age investors to store it physically as well as trade in it via exchanges. While it is wise to not be blinded by the rules of the thumb, historically, gold prices and US dollar have shared an inverse the relationship. It becomes inexpensive for purchasers to use other currencies to buy dollar-priced yellow metal. In India it also holds an emotional worth and, hence, is often bought but not always vended by people. Various central banks also keep it as the reserves and collateral.