What Factors Determine Silver and Gold Pricing in India

There is no doubt that silver and gold are among the most complicated assets to value when it comes to commodity trading. According to live mcx control analysts, currencies, stocks and other commodities mainly depend on the country, data of the stock, physical supply and demand of the commodity. Once you get fundamental data on the asset from mcx market news, it is very easy to understand most live mcx price movements even if you are an inexperienced investor.

The inventory/production/ demand formula is not likely to apply when pricing gold. This is because gold is not very different from money. In other words, gold prices are subject to speculation, manipulation and psychology. In addition, you need to know that silver and gold are valued indirectly. Most investors trade in gold and silver basing on technical or rather limited set of fundamentals. When the prices of gold and silver fell in 2013/2014, most investors found themselves on the wrong end because of their poor knowledge.

Some scholars argue that gold does not generate income but has the carrying cost. This opinion is ingenious because when there is inflation in the United States of America, gold has higher capital gains when compared to the total returns realized on bonds or stocks including coupons and dividends. The prices of silver and gold indicate the strength of world economy excluding the US versus the expected interest rates in the US and its Gross Domestic Product (GDP). In simple terms, the prices of gold and silver will increase when the US economy is weak. This also means that when the world is experiencing a recession, the prices of gold and silver will not be at their highest point. To understand the above statement easily, here are factors that determine silver and gold prices in India.

- Prices of other commodities combined with their global demand and indirect pricing of their cost of production.

- Global inflation ([particularly in the US) and money supply.

- Growth imbalances and trade against the United States of America and the resultant effect that can lead to the fear factor.

- Activities of central banks such as money printing, sales and purchasing gold.

- Real interest rates in India and United States of America when compared to wages and inflation that might to lead to financial repression.

- Production, inventory and demand formula in terms of physical demand as well as supply.

- During the festive season, the price of gold tends to increase because of the high demand among those who want to make ornaments and jewelry. This does affect the price of silver.

In conclusion, resistance levels and technical support are more crucial when pricing gold and silver than other assets. Understanding the fundamentals of gold pricing is somehow complex. The prices of gold and silver respond to changes in the prices of other commodities and global growth. Global inflation and especially in the US also influences the prices of these two commodities in India. The other activities of India’s central bank and other banks of the world can cause to prices to decrease or increase.

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