Why will Gold price keep increasing?

Gold prices have been increasing since last 5 years from Rs.450 per gram in 2004 to now at Rs.1910 per gram in 2010. As we see Gold prices have quadrupled or multiplied 4 times in 6 years. Recently wee see Media reports in Indian newspapers that high gold prices is discouraging buyers in India and Indian people are buying less Gold Jewelery than before because of high prices.

The value of Indian Rupee is pegged to US dollar between Rs.44 to Rs.50. The Government and RBI (Reserve Bank of India) will never allow the value of Indian Rupee to increase against US Dollar. Today India is highly dependent on exports particularly IT exports, therefore it makes absolute sense for Government to maintain the value of Indian Rupee competitive against the US dollar, so that India will continue to get more business in IT and other export sectors. This will most importantly create jobs for more people and also more job opportunities due to strong exports. Therefore it is in interest of maintaining a strong job market, the government has to maintain the Indian Rupee competitive, that is not allow the Rupee to increase in value!

This is the same strategy other Asian countries like Japan, China and United Arab Emirates etc follow to increase exports and create more job opportunities.

Therefore since no major Asian country wants to allow their currencies to increase in value, Gold price will only go up. Since Gold price will increase when value of paper currencies keep falling.

Gold price moves opposite to value of paper currency.