As I am writing this, the price of Gold per 10 grams is Rs 23,086 for 22 carat and Rs 25,970 for 24 carat in Delhi. Not very long ago, the price of gold was hovering around Rs 30,000 range. But all of a sudden, in the last few days, the price of gold is witnessing a free downfall.
Financial analysts claim that gold has never seen such fluctuations in the last 30 years. In fact, the price was always increasing year on year. A recent report by CBS News claims that such huge global drop in gold prices has been seen after 1983.
So, what are the reasons which make gold rates so fluctuating?
I have done some research, and came up with these rumours and some facts which may have direct or indirect impact on this rollercoaster ride of gold, all around the world:
Indian Tax Rates:
Today, India imports more than 800 tonnes of gold, worth $56 billion from open markets around the world. In January, 2013, Indian government had announced a 50% increase in import tax rate for gold and made it 6%.
Some analysts claim that this has created a ripple effect across the Asia-pacific as after China, India is the biggest consumer of gold in Asia. Has this led to decrease in gold prices?
Cyprus is in heavy debt and at the same time, it is full of unaccounted black money from the world’s billionaires (mainly Russia). And rumour mills are abuzz that Central Bank of Cyprus may sell some of its gold in order to pay off their debt.
The stories of gold selling, which are appearing in major publications, is triggering alarm bells as the market would be flooded with gold. Maybe this is one reason for fluctuations in gold rates across the globe?
US economy is reviving and the country’s unemployment rate is dropping. This has lead to more investment in stocks and mutual funds within USA and Europe. The reason prices of gold is decreasing is that, US citizens are known to use gold more or less for investment purposes.
Now, when the stock market is improving, they have started selling their gold and this has led to fall in prices.
After Russia, China is world’s biggest consumer of gold. But unfortunately, China is experiencing an economic depression these days. As per Reuters, China witnessed its slowest growth rate this year, since 1999.
The Chinese government is more focused on infrastructure development and manufacturing, compared to gold buying. This is also cited as a major reason for fall in gold rates.
What’s your take? Why do you think Gold rates are suddenly going down all around the world? If you are into trading and/or finance, then I would love to hear your views.