Gold and Indian Rupee has a very unique correlation, In this article, I will explain how the Indian Rupee movement impacts Gold prices. Traders have a habit of buying gold whenever there is inflation in the economy, so in other words, Gold act as an inflation hedge for many big traders. So when you see inflation in Indian economy then surely there will be buying in Gold.
Another instance of buy into gold is when Indian rupee depreciates i.e. when it loses its value. Everything in the country gets costly and so is the case with gold. Hence, gold will become costly and so traders buy into gold for this reason. Other than these two factors, demand and supply also contributes to the prices of gold. Demand for gold generally increases in the festive season of Diwali and on the beginning of marriage season.
Example: If the international gold price is going up; in India if INR (Rupee) depreciates against us dollar then, we are going to see the gold price quoted in Indian rupees will go higher by higher percentage when compared to international prices.