Gold set a new record of height on 8 October. For the first time it crossed the psychological level of $ 4,000 an ounce. Gold is then all-time high when Diwali is close. It is considered auspicious to buy bullion (gold and silver) on the occasion of Dhanteras and Diwali in India. High prices may affect shopping on Diwali this time. But, in India, people are generally happy in gold, because more or less almost every family has gold jewelery.
Richard Flax, Chief Investment Officer of Wealth Manager Moneyfarm, said, “Gold prices continue to rise due to interest of investors. Gold has risen more than 50 per cent this year. It has jumped almost 12 per cent in September only.” Very rarely this must have happened when Gold would have shown such a fast in any one month. After all, what is the reason for this unexpected boom in gold?
Gold has been traditionally considered to be the safest means of investment. Its demand increases as ziopolitical tension increases. Russia-Ukraine fighting and conflict between Israel-Hamas has increased geopolitical tension. The estimate of the government shutdown and Federal Reserve’s interest rate reduction in the US is also affecting gold. The dollar will be weak when the interest rate decreases. Weakness in dollars makes it cheaper to buy gold in another currency. Therefore, the glow of gold increases due to weakness in the dollar.
US President Donald Trump’s tariff has increased uncertainty for global economy. The increasing burden of debt on governments of many countries is also increasing concern. Trump has imposed a lot of tariffs on small and big countries. Trump has imposed a 50 percent repeat on India. Apart from India, Trump has imposed 50 percent tariff on Brazil only. Due to this, investors have increased interest in gold for safe investment.
The World Gold Council (WGC) said in its report in July that the demand for gold rose 3 per cent to 1,249 tonnes in the second quarter. It had a boom in increasing geopolitical tension and its prices. WGC believes that due to economic uncertainty and geopolitical tension, central banks of many countries in the world are buying gold. Increased investment in gold ETF has also increased the demand for physical gold.
“Gold’s tariff policy was due to the rise in gold earlier this year, while in the second quarter, the second quarter has led to a boom in gold due to high investment in strong sentiments and gold ETFs.” The WGC believes that the rise in prices has affected the demand for jewelery. Teap is not just visible in gold but many big stock markets and bitcoins of the world have also reached the new high.