The world is aware of the obsession that Indians have for gold and it is well known that gold prices in India fluctuate more than anything else. While the gold rates across the world are influenced by market policies, the trend in India is a little different, if not completely alienated. Recently we have heard of a price strengthening in gold in the world market when the US declared a lift on the debt ceiling and the announcement of the lowering of short term interest rates by the Federal Reserve.

Talking of India here, let’s see what influences gold prices in India.

Gold is there in our culture and we buy gold on almost all auspicious occasions. This is deep rooted in our culture and our minds and goes back to times immemorial. Unlike any other part of the world, gold in India is revered and never seen as risk or investment. People believe gold can bring wealth to them and hence buy it as much as they can. Indian traditions believe that the entire planet is placed on bedrock of gold. It is not viewed as a mere metal, but is an object of great affection and at time even obsession. For Indians, gold is probably the last thing that they would sell and the first thing that they would buy. Gold for us is the ultimate security. And since, such an obsession of gold is present, gold prices in India constantly rise and hardly see any drops.

Gold is almost synonymous to Indian weddings. No Indian wedding is complete without exchange of gold. Half or more of expenses made on weddings are spent on gold. This is one reason why the mcx gold prices shoot up high during wedding seasons. Gold is looked upon as ‘stridhan’, something like an insurance plan exclusively for women, who otherwise have no other means of income or anything to bank upon if their husbands don’t provide them or are lost.

Gold coins and bars have come up as a good way to invest. Indian obsession for gold coupled with the need to invest for future has given a rise to this trend. People are now investing more in gold for its high appreciation in value and liquidity which is no less than hard cash. Youngsters who tend not to appreciate gold jewellery so much also go for gold coins and bars. Another advantage of investing in gold coins and bars instead of jewellery is that you don’t lose any money on making charges of mixing of alloys. You get gold worth all your money and is more lucrative for the calculating mind. This again has had an impact on gold and has sent the mcx gold price to a new level.

It is always a combination of all these factors that keep the gold prices in India constantly on the rise. The periodic slumps are due to the absence of one or more of these factors. Anyone who can study and understand these trends can easily be a master in the game of gold trading.