Gold prices have been experiencing a divergence between the Indian market and global markets recently. In India, gold prices have seen a decline, dropping to Rs 74,740 per 10 grams as of 11:40 AM, which is nearly Rs 1,000 lower than the previous week and closer to the lows recorded in September. On the other hand, gold prices globally have edged higher, driven by geopolitical and economic factors.
**Why Gold is Cheaper in India:**
1. **Weakening Local Demand**: Despite a boost in physical demand, especially during the wedding season, the overall global decline in gold prices has outweighed local demand pressures. Gold premiums have risen significantly, indicating stronger retail buying, but it hasn't been enough to reverse the broader downtrend.
2. **Affordability**: Falling gold prices in India have made the metal more accessible to consumers who had delayed their purchases due to high prices earlier. This has led to increased retail demand, though it hasn’t been sufficient to prevent the price slide.
3. **Global Economic Influence**: The strength of the US economy, which has led to high interest rates, has reduced the appeal of non-yielding assets like gold. This global economic condition has also weighed on gold prices in India.
**Why Gold Prices Are Rising Globally:**
1. **Safe-Haven Demand**: Geopolitical tensions, particularly in the Middle East, have boosted gold’s appeal as a safe-haven investment. Regions like the Gulf have seen a surge in demand, with investors seeking security during periods of heightened uncertainty.
2. **Regional Buying and Economic Factors**: Countries such as Qatar and Oman have seen increased gold demand due to both retail and institutional buying, driven by a traditional preference for gold during volatile periods.
3. **Import Costs and Currency Fluctuations**: Differences in exchange rates, higher import costs, local taxes, and logistical challenges have also contributed to higher gold prices globally, creating a disparity between local Indian prices and global rates.
**Future Outlook**: Experts predict that geopolitical tensions could lead to a rebound in precious metal prices. Dr. Renisha Chainani, Head of Research at Augmont, forecasts a recovery, with gold prices expected to rise towards Rs 75,000–77,000 per 10 grams, while silver prices could reach Rs 92,000–95,000.
