Gold nearing 33K

Gold prices touched a new high on Tuesday, reaching Rs 32,975 per 10 gm in New Delhi. Gold prices in India have increased over 15% in the past one year. As discussed in my first blog dated 2^nd Oct QE3 or QuEstion3, the gold prices have moved in a predicted trajectory. There are two things that set the price of gold in India;

one is the price of gold in USD which moves due to qualms and quivers in the financial markets across the globe and then the second the USD-INR exchange rate, which is very much a function of current account deficit, which further depends upon various things.

One can very well argue that the local price increase is a function of current festival and marriage season, but globally the prices of gold are stable in a range between $1740 an ounce to $1755 an ounce. This time around the price increase is solely due to the INR depreciation. While INR has recently deprecated because of govt’s inability to enforce various new policies, the logjam in the parliament continues and is keeping foreign investors wondering.

But whatever the analysts and experts say, I believe the rise in gold prices and depreciation in INR has more reasons to it, read QE3 to get an insight.