Exchange Rate Fluctuations and Domestic Gold Prices in India (2015–2025) by Aditya Singh

Exchange rate fluctuations and domestic gold prices: A Year-On-Year Analysis

Introduction

This paper investigates the extent of the relationship between the domestic price of gold and the US dollar-Indian rupee (USD/INR) exchange rate. This topic is of high importance, as in India it is viewed as more than an ordinary commodity, functioning instead as an economically significant asset that influences households, investors, financial institutions, and policymakers. Therefore, understanding the factors that affect domestic prices can provide insight into financial decisions and broader macroeconomic conditions.

Exchange rates are relevant to the domestic gold price because they transmit changes in

international gold prices and global economic events to the Indian market. Fluctuations in the USD/INR exchange rate influence the price of imported commodities and internationally

traded assets; therefore, examining the relationship between exchange rates and the domestic price of gold is important to understand how gold prices are determined.

Although previous research has suggested a relationship between exchange rates and

domestic gold prices, relatively few studies attempt to isolate the effect of exchange-rate

movements from other factors influencing domestic gold prices. This creates a gap for

research that compares their annual change year-on-year while also considering movements

in the international price. Accordingly, this paper asks the question: How do exchange rate

fluctuations affect the domestic price of gold year on year?

To Read The Full Research Paper, Click below -