Gold is often seen as a hedge against inflation, as its value tends to rise during periods of rising prices. Investors flock to gold to preserve their purchasing power when fiat currencies lose value due to inflationary pressures.
Changes in interest rates, set by central banks, can influence gold rates. Low interest rates reduce the opportunity cost of holding gold, making it more attractive to investors seeking alternative investments with higher potential returns.
Geopolitical events such as conflicts, trade disputes, and political instability can trigger uncertainty and volatility in financial markets. Investors turn to gold as a safe-haven asset during times of geopolitical turmoil, driving up demand and prices.
Investor sentiment plays a significant role in gold rate movements. Fear, uncertainty, and risk aversion can lead investors to seek refuge in gold, while optimism and confidence may reduce demand for the precious metal.