Gold prices are among the most dynamic commodity rates in the world. Gold prices in India are a result of multitude of factors at play. Please go through the slide to know more.

1. Why are Gold prices
falling?

2. Gold prices are among the most dynamic commodity rates in the
world. Gold prices in India are a result of multitude of factors at
play. The recent steep fall in gold prices have been due some
common factors and some factors that generally don’t affect gold
rates. Gold price in India has been falling steadily for the past two
years and the recent sharp decline has brought down prices to a
new low.
Gold prices in India are currently hovering around the level of
Rs.24,000 for 10 grams of 99.9 purity of the yellow metal. This
is around the level prices were at mid-2013

3. Primary reasons for the decline in gold prices in India can be
attributed to:
 Monsoon concerns
 Gold stocks
 Chinese sell-off
 US Fed rate hike and strengthening dollar
 International dynamics

4. Monsoon concerns
This year’s monsoon has been unpredictable at the outset. A weak monsoon means that the
millions of farmers are left uncertain about their crops. For a country like India where a
substantial portion of the population relies on agriculture directly or indirectly, weak monsoon
signals lower income for the population.
Farmers are also one of the key drivers of gold sales in the
country. Almost 70% of the national demand for gold comes
from rural regions who view gold more than just a commodity
– it’s a means of long term savings for them to beat inflation
needs and offset their weak links with the country’s banking
system.

5. Gold stocks
India has traditionally been among the top importers of the bullion in the world. As such,
the country has been successful in stockpiling large quantities of the metal over the
years.
Currently, the national stocks are at a comfortable
level and so prices of the metal have remained stable
or fallen due to this factor.

6. Chinese sell-off
The Chinese stock markets have experienced large fall in share prices during the past few weeks. As
such, many stocks have discontinued trading to minimize losses. Lack of investor confidence on the
stock market has driven them toward gold and large sell-offs have been seen to offset cash crunches.
Recently, investors sold off 33 tones of the bullion in the
Shanghai spot market, and reports have indicated that the
Chinese stock of the bullion is lower than what was believed to
exist.

7. US Fed rate hike and strengthening dollar
A rate hike by the US Fed is an indication of better returns from investments made in the dollar. Seeing
that gold rates are already on a downward trend, rate hikes by the fed will further reduce gold rates as
investors turn to dollar to hedge their funds in.
Similarly, a stronger USD means that the countries with
weakening currencies such as the rupee have to shell out more
to buy the same quantity to gold, as gold prices are decided on
USD.

8. International dynamics
With countries like Greece on the verge of bankruptcy, and Iran being included in the worldwide economy once
more, gold bullion prices are bound to be affected owing to widespread consumer sentiments, for better or for
worse.

9. Gold prices in India are touted to fall further in the coming
months and as such you can expect further dynamism in
trading rates of the yellow metal in the near future.

10. Thank You
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