According to an evaluation done by the Kotak Mahindra Bank, the gold prices of the gold of 995 purity (24 carats), which touched a record high of Rs. 50,392.75 per 10 gram is expected to rise by another 10% in the remaining quarters of the Financial Year 2020.
Gold Prices: Reasons for Inflation
According to Shekhar Bhandari, the transaction banking head, Kotak Mahindra Bank, gold prices have already surged by 41% since the last year. There have been many reasons behind gold inflation which include the US-China trade crisis, which has induced uncertainty in the global trade market and has driven people into making safe investments, the safest of all being gold.
The rest of the factors such as the negative real interest rates by the banks, as well as the world pandemic. In addition to this, there also has been a surge in the demand for jewelry ever since the lockdown measures have been relaxed in states like Karnataka, Kerala, West Bengal, Punjab, and Tamil Nadu.
Also, the clients who have registered for a gold loan in March – April have witnessed significant benefit from the inflation as they had priced their gold before the inflation period but had opted for a loan moratorium. Because of this, they are liable to start repaying in August. The inflation, meanwhile, has caused them a huge inventory gain.
Also check: Kotak Mahindra Bank Gold Loan
Gold has also seen rising investment demands. The domestic gold ETFs touched a record of an inflow of Rs. 494 crore in June.