How Global Events Impact the Price of Gold & Silver in India

Recently, the US Federal Reserve has cut the interest rates by 0.5% and decided to set the new rates at 4.75% to 5%. Making the blow in market with this, gold and silver prices will also get affected globally.

This and other global events are some of the factors that impacts the price of gold and silver in India. Do you know how global events affects gold and silver prices right here in India?

You may have an idea about this or have some questions regarding this, and we have the complete answer with this blog! Today, we are going to discuss how various global factors affects the gold and silver prices in India.

Let’s understand the impacts of global events on gold-silver prices in India.

Impacts of Global Events on the Price of Gold & Silver in India

The prices of gold and silver are so volatile that they keep changing. However, we can highlight how international happenings are affecting prices.

Whether you are a new or seasoned investor in precious metals, being aware of these factors can help you in your gold investment journey. We have outlined key global factors and explained how they impact on gold and silver prices in India.

1. Economic Trends

   The global economy significantly influences gold and silver prices. When the economy is strong and confidence is high, demand for precious metals typically falls and prices are likely to decline because investors prefer stocks and other options to invest.

   Precious metals generally increase in price when the economy is unstable or declining. In unstable economies, gold and silver are seen as safe investments. Investors prefer gold and silver to protect investments against market ups and downs.

   For instance, during uncertain economic times in big countries like the United States, the demand for gold rises. This increase in demand raises global gold and silver price and impacts Indian market as well.

   Here, if the US dollar gets stronger, people using weaker currencies may find gold’s price higher than usual and that can also impact the global gold demand. It also affects India’s gold and silver prices.

2. Geopolitical Events

   Geopolitical conflicts greatly influence gold and silver prices. In times of wars, political instability, or sanctions, investors usually find safe places for their money.

   For instance, previous conflicts in the Middle East have caused gold prices to increase as people aim to protect their wealth during uncertain periods. Geopolitical events, such as the ongoing war between Russia and Ukraine, have global effects.

   In India, investors are increasing their investments in gold and silver due to this uncertainty, which drives up prices. Thus, the demand for precious metals in India increases due to the global economy.

3. Monetary Policy

   Gold and silver prices are greatly affected by monetary policy, particularly decisions from central banks. Such the Reserve Bank of India (RBI) or the U.S. Federal Reserve, change interest rates, it influences the attractiveness of holding non-yielding assets like gold.

   When interest rates are on the rise, buying gold costs more which leads to lower demand for gold. On the other hand, when interest rates are low, gold demands increase. Thus, the RBI's interest rates and monetary policies have a direct impact on gold in India.

4. Inflation

   When costs of living rise, money loses its value. In these situations of inflation, gold plays the role of shield for investors. More investors buy gold to protect their wealth which results in increased demand and higher prices.

   In the past, higher gold prices have typically been associated with times of high inflation. For instance, in India, gold prices usually picked up when inflation was high in developed countries.

5. Supply Chain Disruptions

   Disruptions in the supply chain can impact on the prices of gold and silver. When shipping or mining of gold and silver is affected, it can reduce the supply of them. If the supply decreases while their demand stays the same or increases, their price also increases.

   For instance, the COVID-19 pandemic majorly impacted the precious metals supply chain. Mining activities were halted, and transportation routes were disrupted, leading to a decrease in the supply of gold and silver and an increase in the price.

6. Currency Exchange Rates

   When the rupee loses value against the dollar, the cost of importing gold and silver increases, leading to higher prices in India. On the contrast, if the rupee gains value, prices may drop, making gold and silver more affordable. 

   This way, the value of the Indian Rupee compared to the US dollar affects the cost of importing gold and silver in India.

Conclusion

Knowing these factors will help you stand out as an investor in gold and silver market investments. You can improve your choice and understand when to buy or sell gold silver in the market. If you’re one of the investors who is continuously investing in the gold and silver market, then get in touch with us!

Shree Ambica touch is the renowned name in the precious metal market. We’re one of the pioneer gold refineries of India, currently providing gold and silver market services from its refining, assaying, minting to bullion market.

Contact us to find out more!