Gold Prices Soar by ₹20,000 in Three Weeks Amid Dollar Weakness

Gold prices in India have been on the rise since August, increasing by ₹20,000 in just three weeks. This sudden surge has left many wondering what's behind it and how long it will last.

One reason for this increase is the weakening of the US dollar. Gold is priced in dollars globally, so when the dollar weakens, gold becomes more expensive. In the past month, the Dollar Index has fallen by 2.5%, causing the price of gold to rise.

Another factor contributing to the surge is the expectation of lower returns on US bonds. When bond yields are low and rising, investors tend to withdraw their money from bonds and invest in gold instead. This happened recently when the US Treasury announced it would buy back more long-term government bonds from the market.

Central banks around the world also play a role in this increase. They have been buying gold as part of their foreign exchange reserves, reducing the dollar's dominance and causing gold prices to rise.

India has seen an increase in gold buying too, with 45 tonnes purchased in July alone. This is partly due to the festive season and investors looking to profit from rising gold prices.