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The price of gold reached an unprecedented peak in India, hitting Rs 76,700 on Wednesday, mirroring a global trend in the bullion market. This surge can be attributed to a combination of factors, including a decrease in US 10-year bond yields and a backdrop of escalating global instability linked to rising public debts. The decline in bond yields, which fell below the 4.05% mark, created a favorable environment for gold and silver, acting as a safe haven for investors seeking refuge from economic uncertainties.
The rise in public debt, driven by weak global economic growth, tight financial conditions, and unstable economic policies, has significantly influenced the upward trajectory of gold prices. The International Monetary Fund (IMF) projects a potential surge in global public debt to 115% of total GDP within three years in a severe scenario, a substantial increase compared to current projections. This looming financial crisis is pushing investors towards gold as a safe haven asset. Additionally, geopolitical tensions, particularly in the Middle East, have further fueled demand for gold, a traditional safe haven asset during periods of conflict and instability.
In the international market, gold also witnessed a substantial increase, trading at $2,677.4 an ounce, a rise of 0.54%. Silver followed a similar trend, experiencing a 1.10% increase to $31.89 an ounce in New York. The weakening Indian rupee, hitting a record low of 84 to a dollar for the first time, also played a role in boosting gold prices within India. The currency's decline can be attributed to foreign fund outflows from Indian equities. These factors, coupled with the upcoming festive season in India, which traditionally witnesses a surge in gold demand, particularly for jewelry, are anticipated to maintain upward pressure on gold prices in the near future.
The retail price of gold in India is influenced by various factors beyond its intrinsic value, reflecting its deep cultural significance as an investment and its crucial role in traditional weddings and festivals. Investors and traders remain vigilant, closely monitoring market fluctuations and global events that could potentially shape the future trajectory of gold prices. As the global economic landscape continues to evolve, gold's position as a safe haven asset and its cultural significance in India are expected to remain key drivers of its price movement.
Source: Gold Hits All-Time High of Rs 76,700: Why Are Bullion Prices Rising in India?