What Affects The Gold Price In India?: You Never Missed Points

Gold is one of the most precious metals in Indian culture. With an annual gold demand equivalent to 25% of the world’s physical demand for gold, India seems to be one of the largest consumers of gold. God is mostly used in weddings, religious festivals, and several other occasions. Indian temples are famous for having golden idols.  

Gold has always been looked upon by Indians as something of sacred importance, and therefore, it has been an integral part of Indian values and tradition. It is popularly used on auspicious occasions and also offered as a gift

There is high liquidity associated with gold, which also makes it a profitable investment option. In times of financial instability, gold can come for rescue as it never loses its value. For instance, the selling gold price today is Rs. 46,430 per 10 grams of 24 karat gold

Various factors affect the gold price in India, such as massive consumer demand and fluctuations in the international market, due to which an influx of people explore the idea of selling gold for cash. 

Here are some of the factors impacting the selling gold price today in India 

Consumption demand

The gold rate in India is also affected by gold consumption. It is part of Indian culture, tradition, and the desire for beauty and financial protection. India is the world’s second most populated country, which means the demand for gold is never low. 

Gold is also considered an investment option, which is why you can also see an increase in Indians selling gold for cash. There are two factors behind high consumption demand, the safety of investment and adornment. 

Protection against volatility

Investing or buying gold also protects against volatile and uncertain events like the financial instability induced by the unprecedented COVID-19 pandemic. Indian households view gold as a safe-haven when there are urgent financial requirements. 

Since gold has a high value and is always a profitable asset, investors buy gold irrespective of the domestic economy, whether growing or in recession. For instance, the gold price per gram in Bangalore still holds great value despite a poor performance at prices nationwide. 


Another factor impacting the gold price in India is inflation. When inflation rises, the value of a currency drops as well, which is why more people tend to hold money in the form of gold and then opt for selling gold for cash when the gold prices rise

Gold prices are also affected by the rate of inflation. For instance, when the inflation rates rise, the demand for gold increases too and vice versa. The same rules apply to global rates as well. 

The monsoon factor

The rural demand for gold plays an important role in determining gold prices. The rural demand for gold in the country primarily depends on monsoon seasons. People from rural India account for a 60% share in the annual gold consumption, that is 800-850 tonnes of gold. 

If the crops are good during the monsoon, farmers tend to purchase more gold from their income to increase their assets. However, a bad monsoon season could decrease the purchase of gold. 

The weakening dollar 

There is no doubt that the dollar dominates international gold, and any changes in the dollar value mean changes in gold prices. For instance, when the currency weakens, the gold prices increase and vice versa. It is a golden opportunity for investors to store value in gold. 

Due to an increase in the value of the dollar in India, the selling gold price today is also adversely impacted, such as the gold price per gram in Bangalore has dropped almost Rs. 10,000 from the peak. 

Jewelry market

The gold jewellery market is highly dependent on festive seasons. For example, during wedding seasons and religious festivals, the gold prices in India increase, which leads to an increase in the demand as well. 

The wedding seasons usually cause a drastic increase in gold prices. However, the demand for gold is not just limited to jewellery, but to manufacturing electronic devices as well. The gold demand fluctuates depending on festive seasons and manufacturing capacity. 


Gold happens to be one of the popular investment options. It holds a symbol of wealth and is largely consumed during special events. The factors impacting the gold rate mainly depend on consumer demand, inflation, the dollar’s position in the global market, and of course, the monsoon season.


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