Gold Price

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Context: The global price of 24-carat gold on April 10 was $2,349.88 per ounce, while in India it was ₹7,174 per gram. Gold prices have seen a significant increase in recent weeks, with expectations for further rises. Gold prices are directly linked to global crude oil prices, showing a positive correlation. Conversely, there\'s an inverse relationship between the external value of the U.S. dollar and the international gold price. When oil prices rise, gold prices tend to increase, and when the U.S. dollar weakens against major currencies, gold prices typically rise as well.

Reasons:

Rise in international crude oil prices signals global inflation, driving up demand for gold as an inflation hedge.	Depreciation of the U.S. dollar against major currencies leads to an increase in the global priceof gold.
Gold is considered a real asset, immune to loss of value compared to financial assets during periodsof inflation.	The global price of gold, expressed in U.S. dollars, rises when the dollar\'s external value decreases.

How Gold Price determined Globally:

Supply Side Factors	Demand Side Factors
Production of gold by producing countries, which can be affected by mining regulations, geopolitical factors, and technological advancements in mining.	Institutional demand driven by central banks\' need to diversify reserve assets and hedge against currency devaluation and economic instability. Central banks, especially in China, havebeen increasing goldholdings.
Cost of mining gold, influenced by energy prices (such as crude oil and natural gas), labor costs, and technological investments.	Investor demand from individuals and institutional investors seeking safe-haven assets during times of economic uncertainty, geopolitical tensions, and inflationary pressures. Investors may opt for physical gold, gold derivatives, or Exchange Traded Funds (ETFs) as part of their investment portfolios.
Challenges in gold production due to the depletion of easily accessible reserves, leading to the needfordeeper and more expensive mining operations.	Consumer demand driven by cultural and traditional preferences, particularly in countries like China and India where gold is purchased as jewelry and a store of value for special occasions and festivals. Consumer demand is often seasonal and influenced by economic conditions.
Fluctuations in energy prices (e.g., crude oil and natural gas) impacting the operational costs of gold mining, as goldmining is energy-intensive.	Industrial demand for gold in technology applications due to its unique properties like malleability and conductivity. Gold is used in electronics, medical devices, andaerospace industries, contributing to steady industrial demand.
Geopolitical factors influencing mining operations and supply chain disruptions, which can impact gold supplyand prices.	Emerging market demand, particularly from countries experiencing rapid economic growth and wealth accumulation, contributing to overall global demand for gold.

How Gold Price determined in India:

Factor	Impact on Gold Prices	Mathematical Formula
Demand and Supply	Higher demandthan supply leadsto higher gold prices.	-
	Lower demand than supply leads to lower gold prices.	-
Interest Rate (Gold Loan)	Higher interest rates result in heavy sell- off of gold, increasing supply and pushing gold prices higher.	Gold value = (Gold rate x purity x weight) / 24 (Purity Method - Percentage)
	Lower interest rates increase demand and lower gold prices.	Gold value = (Gold rate x purity x weight) / 100 (Karats Method)
Economic Situation (Inflation, Recession)	Adverse economic conditions lead to increased demand for gold as a hedge against inflation and recession, raising prices.	-
	Economic stability may decrease demand for gold, lowering prices.	-
Rupee-Dollar Conversion Rate	Stronger dollar against the rupee increases gold prices in India due to higher import costs.
Mathematical Formula to Calculate Gold Prices	Purity Method(Percentage):	Gold value = (Gold rate x purity x weight) / 24
	- Calculate gold value based on gold rate, purity percentage (e.g., 22 karat), and weight of gold in grams.	-
	- Karats Method:	Gold value = (Gold rate x purity x weight) / 100
	- Calculate gold value based on gold rate, karat purity (e.g., 22 karats), and weight of gold in grams.	-