Gold set a new record high on October 8. For the first time it crossed the psychological level of $ 4,000 an ounce. Gold is at all-time high as Diwali approaches. In India, buying bullion (gold and silver) on the occasion of Dhanteras and Diwali is considered auspicious. High prices may impact shopping this Diwali. But, in India, people are generally happy with the rise in gold prices, because more or less almost every family has gold jewellery.
Gold has increased by more than 50 percent this year
Richard Flax, chief investment officer at wealth manager Moneyfarm, said: “Due to the interest from investors, gold price The pace continues. This year gold has increased by more than 50 percent. It has jumped by about 12 percent in September alone. Very rarely has gold shown such a huge rise in a single month. What is the reason for this unexpected rise in gold?
Support is also being received from the expectation of interest rate reduction in America
Gold has traditionally been considered the safest means of investment. Its demand increases as geopolitical tension increases. Geopolitical tension has increased due to the Russia-Ukraine war and Israel-Hamas conflict. Government shutdown in America and Federal Reserve’s expectation of reducing interest rates are also affecting gold. The dollar will weaken if interest rates fall. Weakness in the dollar makes it cheaper to buy gold in other currencies. Therefore, when the dollar weakens, the shine of gold increases.
Trump’s tariff policy has increased uncertainty
US President Donald Trump’s tariffs have increased uncertainty for the global economy. The increasing debt burden on the governments of many countries is also raising concerns. Trump has imposed a lot of tariffs on small and big countries. Trump has imposed 50 percent tariff on India. Apart from India, Trump has imposed 50 percent tariff only on Brazil. Due to this, investors’ interest in gold has increased for safe investment.
Gold demand increased by 3 percent in the second quarter
The World Gold Council (WGC) had said in its report in July that gold demand increased by 3 percent to 1,249 tonnes in the second quarter. The increasing geopolitical tension and rise in its prices had a role in this. WGC believes that due to economic uncertainty and geopolitical tension, central banks of many countries in the world are buying gold. The demand for physical gold has also increased due to increasing investment in gold ETFs.
Stock markets and bitcoins also on the rise
Flax said, “The reason for the rise in gold in the beginning of this year was Trump’s tariff policy, while in the second quarter, gold has increased due to strong sentiment and more investment in gold ETFs.” WGC believes that the rise in prices has affected the demand for jewellery. The rise is not only visible in gold but many big stock markets and bitcoins of the world have also reached new highs.