Why The Price Of Gold Is Increasing In The Stock Market?

Gold has been the most preferred and safest form of investment. Before the arrival of the stock market and mutual funds. Buying gold is mostly preferred in all over the world. In recent months the prices of gold are continually rising. Ten gram of gold is nearly $670 in the international market. That is huge and the recorded rate of gold that has ever been seen in history. 

Despite the coronavirus pandemic where most of the business and stock market prices are crashing. The gold is achieving constant growth. Moving further, let’s discuss some reasons behind it.

Decreased supply

  • As you all know, the price of every commodity depends upon demand and supply chain. Due to the pandemic, the supply of gold is disturbed globally. That results in a high price in the stock market. All the gold that has been mined is still not able to send across the countries. Due to which the demand increases drastically in the international market. Various potential investors are now investing in gold.
  • You should note that it is the only commodity that has shown drastic growth in the time of lockdown. This offers the reliability of commodity in the international market. However, due to economic crises and regular income loss, millions of people are now selling their gold. This could decrease the price of gold in the stock market.

Interest rates

  • The price of gold is inversely proportional to interest rates. When the cost of the commodity falls, the people will not get a reasonable interest rate. Hence, they break their investments and start buying gold. On the other side of the price rises, people will get an affordable interest rate on gold. This has been seen during the pandemic. Millions of people are investing in gold., thus shown a drastic increase in demand that ultimately leads to a reasonable high stock price.

Value of currency

  • As you all know, the value of the currency depends on the gold reserve, and accordingly, the country is permitted to release currency in the market. In the pandemic, most businesses and services have suffered from the massive loss that ultimately affects the country’s currency. To recover currency, most of the countries have started buying gold. Thus, the value of gold is naturally going up in the stock market.

High import duty

  • To recover economic losses that happen due to the global depression n world economy. Many countries have risen the import duty on essential commodities. Gold is one of them. It ultimately results in a high price in the domestic market. According to experts, the value of gold is expected to be continually growing in the upcoming years. So, if you are searching for any suitable option for investing money, then gold is best.

Lastly, gold is one of the most trusted commodities across the world. It has been traded from the past time. Nowadays, the sudden increase in demand is the leading cause of its high stock market rate. It is expected to show some growth next year also.