Gold prices in India: Rates on June 24

Gold has been significant throughout history, often used as a medium of exchange and a store of value. Nowadays, besides its appeal as jewelry, it’s regarded as a safe asset during uncertain times. Many people also view it as a hedge against inflation and currency value declines since it isn’t tied to any specific government or issuer.

Central banks are the main holders of gold. They often buy gold to support their currencies in times of crisis, aiming to diversify their foreign exchange reserves and strengthen economic perceptions. For instance, in 2022, central banks bought 1,136 tonnes of gold, worth roughly $70 billion, marking the highest annual acquisition since records began. Countries like China, India, and Türkiye are rapidly increasing their gold reserves.

Gold generally has an inverse relationship with the US dollar and US Treasuries, which are considered major safe-haven assets. When the dollar weakens, gold prices often rise, allowing investors and central banks to diversify their portfolios. Moreover, gold often faces competition from riskier assets. For instance, stronger stock markets might suppress gold prices, while drops in these markets could benefit the precious metal.

Various factors can influence gold prices. Events like geopolitical instability or fears of economic downturn can lead to quick price surges as gold is deemed a safe haven. Due to its non-yielding characteristic, gold prices typically increase when interest rates fall. Yet, rising costs can apply pressure on its value. Ultimately, the movement of gold prices largely depends on the behavior of the US dollar, since it is priced in that currency. A robust dollar often dampens gold prices, whereas a weaker dollar might boost them.