Gold is considered to be the safest investment option in times of economic uncertainty. Gold has given investors 7 per cent returns since the beginning of this year. However, its prices have seen sharp fluctuations many times. Experts say that amid rising trend in global inflation and interest rates, gold may continue to be beneficial for investors. Experts are expecting a rise in its prices due to five reasons.
rising inflation
Where retail inflation in India has crossed 14 percent. At the same time, it is at a four-decade high in many countries including Britain and America. Experts say that barring short-term fluctuations, gold prices tend to see a bullish trend rather than a fall in periods of rising inflation. This is because gold is considered a better investment option to combat inflation. In such a situation, there is a possibility of a rise in gold in the coming time as well.
interest rate hike
The Reserve Bank recently increased the repo rate by 0.40 percent while the US Fed increased the repo rate by 0.50 percent. Apart from this, the central banks of Britain and Australia have also increased interest rates. This increase in interest rates has been done to curb inflation. Experts say that due to the increase in rates, loans are becoming expensive, due to which the common man along with the industry also avoids taking loans and expanding business. Due to this there is a possibility of slowing down the economic growth. In this situation also, the price of gold is expected to rise.
strong dollar
The global price of gold is determined in dollars. Due to high crude oil prices and rising interest rates, investors are preferring to invest in America by withdrawing capital from developing countries like India. This has increased the demand for the dollar, which has also led to a rise in its prices. In such a situation, due to the strengthening of the dollar, there is scope for a rise in the price of gold.
Disruption in the world’s supply chain
There is a lockdown in many cities due to the increasing case of corona in China. This has disrupted supply chains around the world. This has had an impact on many sectors including the auto industry to consumer durables. Due to this, the fear of economic slowdown has increased again at the global level. In this situation also, an increase in gold prices can be seen.
Prolonged war in Russia-Ukraine
One of the major reasons for the uncertainty in the world economy is the war between Russia and Ukraine. If it drags for a long time, its effect can be seen on the global economy. Experts say that in view of this crisis also, there can be an increase in gold.