Gold Price At Record Highs

 Gold and Equities have reached their highest levels ever. International gold prices have crossed $2,200 mark.

    While gold prices have not yielded any returns globally in the past 10-12 years, India's gold prices have performed well due to the Rupee depreciation.

    The RBI has been continuously accumulating gold,🪙 increasing the total reserves to more than 800 tonnes. RBI has a relatively lower gold reserve compared to other countries. 

The top 5 central banks with the largest gold reserves are as follows:🏦

1. United States: 8,133.5 tonnes, representing 77.5% of foreign reserves

2. Germany: 3,362.4 tonnes, representing 74.5% of foreign reserves

3. Italy: 2,451.8 tonnes, representing 69.3% of foreign reserves

4. France: 2,436.0 tonnes, representing 64.5% of foreign reserves

5. Russia: 2,295.4 tonnes, representing 22.0% of foreign reserves

Here are some reasons for the recent rise in gold prices:🪙

• Decline in the Dollar Index: The inverse relationship between the dollar and gold prices is crucial. A weakening dollar makes gold relatively cheaper for investors holding other currencies, leading to increased demand and higher gold prices. This relationship is significant in the global gold market, impacting prices across different currencies

• Expectations of Interest Rate Cuts: Anticipation of interest rate cuts by central banks, like the US Federal Reserve, makes non-interest-bearing assets like gold more attractive. Lower interest rates reduce the opportunity cost of holding gold, making it a more competitive investment option compared to interest-bearing assets during periods of rate cuts.

• Geopolitical Tensions and Uncertainty: Gold is considered a safe-haven asset during times of geopolitical instability and uncertainty. Investors turn to gold as a store of value and a hedge against risks associated with geopolitical tensions, such as conflicts or trade disputes, driving up demand and prices

• Inflation Hedge: Gold has historically served as a hedge against inflation. During periods of rising prices, the intrinsic value of gold remains relatively stable, preserving purchasing power. Investors flock to gold as a way to protect their wealth from the eroding effects of inflation, contributing to an increase in gold prices

• Portfolio Diversification: Investors often diversify their portfolios by including gold as it tends to have a low correlation with other assets like stocks and bonds. This diversification helps reduce overall portfolio risk and provides a buffer against market volatility, especially during economic uncertainties, leading to increased demand for gold and higher prices.

This are some key reasons effecting gold prices. Gold has been a safe and steady investment instrument for investors, providing a safe and steady return.

The first quarter of the year has seen gold prices in India yield 8% returns.📈

Have you made any investments in gold and which instrument did you choose?

Happy Investing😊