Big movement in gold prices! After PM Modi’s appeal and this step of the government, are prices really going to go down?

Gold prices have been continuously fluctuating for quite some time now. Gold had reached its highest peak in the month of January this year, but since then it has seen a big decline. Today i.e. on Monday also a decline was recorded in the price of gold and it fell further. This decline has raised big questions in the minds of those who are thinking of investing in gold or planning to buy it for weddings at home.

According to the data released by the World Gold Council (WGC), while gold prices have declined globally in the month of May this year, the Indian market has seen an opposite rise. However, the history of gold prices shows that whenever there is a huge rise in gold prices, it is immediately followed by a big fall. In such a situation, the big question is whether gold is going to suddenly become very cheap in the Indian market in the coming time? Well, let us tell you that so far this year, gold has filled the pockets of investors in the Indian domestic market and has given very good returns.

What is the difference between the world and Indian markets?

According to a recent World Gold Council report titled ‘Gold Market Commentary: Hiking up a Volcano’, global gold prices declined by 1.4 percent in the month of May. In contrast, gold prices in India saw a strong rise of 4.1 percent during the same period. It has been reported in the report that at the end of May, gold closed at the level of $ 4,546 per ounce in the international market. If we talk about the Indian domestic market, so far this year gold has not disappointed its investors and has earned bumper returns of about 20 percent.

Why did gold prices increase in India?

Now this question must be arising in your mind that when gold was becoming cheaper all over the world, then why were its prices rising in India? In fact, the main reason for this rise in gold prices in India is the increasing geopolitical tension in West Asia (Middle East) and huge turmoil in the bullion markets.

Meanwhile, while recently addressing the nation, Prime Minister Narendra Modi had also made a special appeal to the citizens of the country. PM Modi had asked people to postpone the purchase of gold for some time. Due to this appeal of the Prime Minister and the effect of high prices already present in the market, there was a slight softening in the demand for gold in physical markets like India, South Korea and Japan and some discounts were also given. After this appeal, the government had increased the import duty on gold to reduce the pressure on the country’s balance of payments and to stop indiscriminate import of gold. This decision of the government had a direct impact on the prices of gold and its prices increased in the domestic market.

What does the history of gold prices say?

If we look at the price history of the last two decades, i.e. 20 years, a clear pattern is visible. History indicates that whenever there is a big and record-breaking rise in gold, it is followed by a big fall in the market. The record-breaking rally of gold, which started from September 2022, reached its historical highest level i.e. $ 5,594.82 an ounce on January 29 this year. During this entire period, gold did not disappoint investors and gave handsome returns of about 245 percent. Now it remains to be seen whether history repeats itself and gold prices come down or not.