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5 factors that influence price of gold

5 factors that influence price of gold

03 May 2021

1. Demand and supply of gold is one of the main factors which determine the price 1of gold.

2. Gold is a hedging tool against inflation and hence price reacts to inflation numbers.

3. Interest rates have an inverse relationship with gold and typically, gold price drops when rates rise.

4. Currency fluctuations also influence gold price as gold is traded in USD in the international market and rupee dollar conversion impacts price.

5. Geopolitical factors causing crisis-like situations impact gold prices positively as gold acts as a safe haven and it outperforms other asset classes.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)