why gold prices are rising?
9:24 AM
India virtually imports all the gold it requires, with mining no longer worthwhile and recycling of used gold insignificant.
In April and May 2020, the gold imports
fell by 99%.
Demand in China and India, the world’s two biggest buyers of gold bars, coins and jewelry,
Plunged after the coronavirus stalled imports and emptied malls.
So even when demand is almost zero.
Then why gold prices are increasing?
HOW GOLD PRICES ARE DECIDED IN INDIA?
The Indian Bullion and Jewellers Association (IBJA), a tight clique of 10 big and influential jewellers,provides daily price quotes based on-
International prices, The dollar-rupee exchange rate, Taxes and profit margin.
This is strictly adhered to across the nation.
In short, both oil and gold are held hostage by international prices.
SO WHY GOLD PRICES ARE RISING INTERNATIONALLY?
Internationally, gold prices are on the rise,
as they are perceived safe haven assets
in these troubled times.
More than 700 metric tons of gold have been added to vaults around New York this year, the most in records going back to 1993.
Western investors piling into gold in the
pandemic are more than making up for a collapse in demand for physical metal from traditional retail buyers in China and India.
This is pushing the prices to an all time high.
Exchange traded funds (ETF) in the US and Europe have been piling up gold — almost as an encore of what they did in 2009—
Resulting in an 18% surge in demand for
gold during Covid times.
WHAT ARE ETF?
Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like a single stock.
ETFs invest in a basket of securities representing an index, security or commodity.
The ETFs trading value is based on the net asset value of the underlying stocks that it represents.
WHERE COULD GOLD PRICES GO FROM HERE?
Gold prices risk losing support if ETF inflows slow down.
Or
Gold prices could gain even more momentum if Chinese and Indian demand bounces back.