In the first half of 2022, the price of gold per ten grams in India jumped by over Rs. 3,000. The gold’s price has increased from almost Rs. 48,243 in January to almost Rs. 51,243 in June 2022, representing an absolute rise of nearly 6.5% in just six months.
Gold has always been a haven during economic uncertainty and political upheaval. Inflation, US Federal Reserve rate increases, and the Russia-Ukraine war are just some unclear elements influencing gold prices.
Gold’s YTD (Year to Date) return is still modestly positive compared to other asset classes like equities and bonds.
In this article, let us comprehend a few factors that caused record-high gold prices in 2022.
What are the few factors driving record-high gold prices in 2022?
1. Geopolitical tensions
The conflict that worsened in 2022, the Russia-Ukraine war, was one of the prime reasons for the increasing gold rate per gram.
Russia’s invasion of Ukraine in 2022 caused significant economic losses in capital outflows. As investors move funds out of emerging markets due to geopolitical risks, their dollars will flow into safe-haven assets like gold.
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Additionally, the conflict has put pressure on global supply chains and disrupted international trade. A prolonged conflict could disrupt global commodity exports, leading to higher demand for precious metals.
2. High inflation
The ongoing inflation in the global economy is also one of the prime reasons for the high gold rate per gram in 2022.
When investors feel inflation is about to occur, they purchase some gold for investment purposes to protect themselves from losing purchasing power due to rising inflation.
By purchasing gold, investors are ensuring a stable return on their investment, as gold is seen as a hedge against inflation.
3. High-interest rates
High inflation in 2022 caused central banks to tighten monetary policy by raising interest rates, which led to slow economic activity. This results in fewer job opportunities, which means less money spent on products and services, and, therefore, more investment towards commodities like gold.
Higher interest rates also reduce investor appetite for risky assets, including stocks and bonds, decreasing volatility. Lower volatility often equates to lower returns for investors and higher valuations, which translates into a greater buying opportunity for those seeking out alternative investments, like gold. For more Information http://collectiveapathy.com/
4. Surging crude oil prices
Oil prices tend to go up in times of geopolitical unrest, and due to the ongoing war with Russia-Ukraine, the crude oil price surged.
When oil prices go up, it can lead to inflation, which forces central banks into action. Central banks raise interest rates and cut back on liquidity, which decreases economic activity and triggers the sell-off of equities.
During these uncertain times, people tend to move to safe-haven investments, which are seen as a hedge against inflation, i.e., gold rate per gram.
5. Commodity prices soaring
Moreover, concern over inflation is alarmingly serious as commodity prices rocket to multi-year highs. As a result, when inflation rises, people turn to gold, which is frequently regarded as an inflation hedge.
6. Rupee depreciation
The Indian rupee in 2022 highly depreciated against the dollar. Due to its significant oil imports, India is extremely susceptible to changes in the global market resulting in rising gold prices.
Gold is typically purchased to hold onto it for future generations. However, at times, to obtain immediate liquidity, people sell their gold.
When selling gold, people need to do it at the right time. For instance, when prices are high, they can get good value for their gold. To compute the value of their gold, they can use the gold price calculator.
With Muthoot Gold Point, the entire process of selling gold is hassle-free and quick. They check the gold’s weight, purity, and current selling price using cutting-edge equipment.
You can also use their gold price calculator to compute the gold’s worth in advance.
Gold has always been regarded as a safe investment during economic shocks and uncertain times. In recent years, gold prices have climbed to record highs. As a result, some experts believe they can foresee another golden era for investors who want to invest in gold.
However, in times of uncertainty or financial crisis, investors might look to liquidate their assets to raise cash.
When looking to sell gold, do thorough research on the lender and the timing of your selling.
Hi, I am James Aaron, a professional Data recovery Engineer, working with Quickbooks Data Services as a consultant from the past five years in the USA. I am a specialized and trained Cloud consultant who helps small and medium-sized entrepreneurs. QuickBooks Closes Unexpectedly | QuickBooks Error H202 | QuickBooks Unrecoverable Error | QuickBooks Error 1712 | This Company File Needs to be updated | QuickBooks Restore Failed | QuickBooks Email not working | QuickBooks 2020 end of support