Factors responsible for the Gold price increase

Gold prices have reached a record level. The factors responsible for increase in gold price are

• Purchase of Gold by Central banks: The Reserve bank of India recently purchased 200 tonnes of Gold, which led to the price increase in the international and indian gold markets. Other central banks of Asia and Latin America are also buying gold.
• Demand for Gold in developing countries like China and India: The rapid GDP growth rate, emergence of middle class in the rapidly developing countries is leading to the demand for Gold in international market. The cultural affinity towards gold also plays a major role in demand from India.
• Slowdown in World Economy: As most western economies including USA, UK and EU are facing economic slowdown, more number of investors are looking for safer alternatives like gold.
• Gold is inflation proof, which makes it as a prime investment option.

References:

http://en.wikipedia.org/wiki/Gold_as_an_investment#Factors_influencing_the_gold_price