1.Central Bank :Central Banks buying gold is a strong indicator that gold prices will shoot up. During economic turmoil, demand for gold in central banks increases as they hedge in gold.

 

2.Import costs :Since demand is primarily met through gold imports, import costs affect the gold rate in India. Higher the costs, the higher the price of gold.

 

3.Interest rates on bank fixed deposits :When FD rates fall, investors prefer moving their money to gold. Hence, the demand for gold rises and thereby prices.

 

4.Strength of the US dollar :When the US dollar weakens, gold rates in India rise and gold prices in India fall when the US dollar strengthens.

 

5.Global economic stability :Gold prices rise during economic instability as gold is considered a safer asset than others. People tend to move their money out of riskier assets into gold.

 

6.Seasonality :In India, demand for gold during festivals, marriages, and other auspicious occasions. Prices tend to be higher during these times.

 

7.Inflation :Since gold is bought to hedge against inflation, gold prices tend to rise when inflation is on an upward trend.

 

8.Production costs :Mining companies sometimes increase prices on production costs. This is reflected in the price of gold imported into India.

 

9.Supply :Domestic production and supply are limited in India. Supply constraints can push prices upwards. Similarly, lower supplies of gold globally can make the metal dearer in India.