Gold Rate in India

24 Carat Gold Rates

22 Carat Gold Rates

Factors affecting price of gold in India

The factors which affect the gold price in India are listed below:

• Dollar dynamics – Generally, gold is used as a hedge against movements in the US dollar which means gold prices are inversely proportional to changes in strength of the US dollar. When the US dollar strengthens, gold prices in India tend to fall and when US dollar weakens, gold price rises.
• Import costs – In India, huge demand for gold is primarily met through gold imports, which means that import rates affect the price of gold within the country. Higher the cost of imports, greater will be the prices of gold.
• Interest rates on banks fixed deposits – Fixed deposit of banks is the most popular investment option chosen by millions of Indians after gold. When the FD rates fall, investors prefer to invest their money in gold as an alternative investment option. Therefore, when the demand for gold rises, the price of gold increases too.
• Economic stability – The price of gold generally rise at the time of global economic crisis, as gold is considered as a stable asset to invest upon compare to the other riskier assets. Investors tend to pull their money out of riskier investment and invest into gold. Also, gold has higher liquidity which continues to hold value at the time of instability also.
• Seasonal price – In India, demand for gold increases during auspicious occasions, festivals and marriages. The demand for gold rises, hence the price also rises due to the increased demand.
• Inflation – Gold price in India increases at the time of inflation. Since gold is bought to hedge against inflation, gold prices tend to rise when inflation is on upward trend.
• Demand-supply – Domestic production and supply of gold is limited in India. Major constraints in the global supply of gold tend to raise the price of gold. Similarly, when there is a decrease in the supplies of gold globally, it makes the metal price dearer in India.
• International prices – When gold prices increase in the international market, the price of gold in India also tends to increase as well. For example, when the central banks specially in US and Europe buys gold as a hedge against inflation, the price of gold moves upwards globally.

Why Gold Rate varies across different cities in India?

Gold rates vary across different cities in India mainly due to

• Local Taxes – The local tax rate differs from state to state. Some states levy higher taxes on gold than the others. This is one of the main reasons why gold is more expensive in some cities.
• Gold Associations – Local gold associations have enough power to fix the gold rates. It is true in case of larger cities including Mumbai and Chennai. Due to this reason, the price of gold changes from one city to another.
• Quantity of gold purchased – Purchasing gold in larger quantities tend to decrease the price of gold. Therefore, in larger cities where larger volumes of gold are purchased, gold prices tend to be lower.
• Transportation Costs – India imports most of its gold by sea. Probably this is the least important factor, but the transportation of gold from one location to another requires tight security arrangements and such expenditures potentially affect the gold prices locally.

What are the various gold options available to buyers in India?

Below given are the various forms of gold options which are available to buyers in India are

• Physical Gold Jewellery/Bars and coins – The primary method by which most of the Indian household’s purchases and store gold is in the physical form of gold jewellery, gold bars and gold coins. Investment in gold has become questionable after other forms of gold investments came into effect.
• Gold Exchange Traded Funds (Gold ETFs) – A gold ETF is an electronic form of purchasing gold used to track the domestic physical gold price. They represent physical gold in dematerialized form. One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. They are usually traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd (BSE).When you redeem gold ETF you don’t get physical gold but the cash equivalent. Trading of gold ETFs takes place through a dematerialized account (Demat) and a broker, which makes it an extremely convenient way of electronically investing in gold.
• Gold Mutual Funds – Gold mutual funds are like open-ended funds. Investors may invest any amount of money at any time. The process of investing in gold mutual fund is easier than gold ETFs as it does not require a demat account. Investors can also use the SIP (Systematic Investment Plan) route to invest in gold funds, which is not possible with gold ETFs.
• Sovereign Gold Bonds (SGBs) – SGBs are government security gold bonds denominated in grams of gold. They are used as substitutes for holding physical gold. Investors will have to pay the issue price of the bonds in cash and it will be redeemed in cash on maturity. These bonds are generally issued by Reserve Bank on behalf of Government of India.

Do’s and Don’ts while buying gold

Following are the do’s and don’ts while buying gold

Gold Weight Conversion Table

FAQs on Gold Rates