Gold Prices Fall in India but Rise Globally: Explained

Gold prices have experienced mixed trends recently, with a decline in India but an increase globally. As of 11:40 AM, gold prices in India fell to Rs 74,740 per 10 grams, according to the India Bullion and Jewellers Association. This marks a drop of nearly Rs 1,000 compared to last Monday, bringing prices closer to the lows seen in September. On the global front, however, gold prices have risen, driven by geopolitical and economic factors.

Gold prices rebounded on Monday following last week's sharp losses, as the dollar's rally slowed. Spot gold increased by 1% to $2,587.49 per ounce, while US gold futures rose 0.9% to $2,592 per ounce. Investors are now awaiting comments from Federal Reserve officials for clues on future US interest rate moves.

Why is Gold Cheaper in India?

• Weak Local Demand: Despite increased retail buying during the wedding season, the overall decline in global gold prices has outweighed local demand pressures. Premiums on gold have risen, but demand has not been strong enough to reverse the falling trend.
• Affordability for Indian Buyers: Falling prices have made gold more accessible to Indian consumers, encouraging purchases, especially from those who delayed festive season buys. However, it hasn't been enough to counteract the overall decline.
• Global Economic Impact: The strength of the US economy and high interest rates have reduced the appeal of non-yielding assets like gold, impacting prices in India.

Why Gold Prices Are Rising Globally

• Safe-Haven Demand: Geopolitical tensions, especially in the Middle East, have increased gold’s appeal as a safe-haven asset, driving prices higher in regions like the Gulf.
• Regional Buying and Economic Factors: Countries like Qatar and Oman are experiencing rising demand, with both retail and institutional buying boosting prices.
• Import Costs and Currency Fluctuations: Currency differences, higher import costs, and local taxes have contributed to rising gold prices globally, creating a disparity with India.