How is Gold Rate in India Determined? Get a complete overview

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Indians have always had a penchant for gold. It is an integral part of the Indian culture all through the chronicles of history. Many Indian households even today maintain a significant amount of gold deposits. The love story of Indians and gold is an everlasting affair. You will hardly find a grown-up in India, regardless of their profession or trade, who doesn’t follow the gold rate per gram or the online gold rate. Apart from its auspiciousness, gold is also considered a significant financial instrument for savings and investment. India has seen a steep rise in the number of online gold buyers.

Despite this fondness for gold and related assets, not many people know how gold price is determined. Have you ever wondered who sets the gold jewellery price and how these prices fluctuate every day? In this article, we will at length understand how the gold rate per gram is determined and who has the final say in settling the online gold rate.

Factors that affect the Gold Rate per Gram

Supply

Gold is a rare commodity with ever depleting deposits. Only a few countries globally have large enough reserves of gold from where it can be mined. This rarity of gold makes it precious, and it is a major factor in its pricing. Based on the amount of gold being mined in different countries worldwide, the online gold rate and the gold jewellery price are revised. Most online gold buyers rely on news related to gold reserves and price fluctuation to assess the market’s current demand-supply gap.

Import Rates

The natural reserves of gold in India are becoming scarce as time progresses. We are not able to produce enough gold to match the current demand. Therefore, India imports a large amount of gold from other countries. The duty imposed on the import of gold affects the final price of gold in India. High import duty will increase the gold rate per gram.

US Dollar

It is something many people don’t know about. The rate of gold is heavily dependent on how the US dollar performs. The online gold rate is inversely proportional to dollar rates. Gold is traded internationally, and the US Dollar is the preferred choice of currency for the transaction. Hence, the changes in the USA at the geopolitical level are bound to have a direct or indirect impact on the gold jewellery price.

International Relations

International relations between nations have a lot of say in the final pricing of gold. A tense situation on a global level will push the prices of gold higher and vice versa. Gold is viewed as one of the safest commodities to invest in, and when the global scenario becomes uncertain, most investors turn towards gold for parking their money. It pushes the price of gold higher due to increased demand.

Who Determines Gold Rate Per Gram in India?

International gold prices have a huge influence on how gold prices are set in India. For example, if you hear the phrase “gold rate today 22k in Bangalore“, it implies that the rate of gold as per the international prices is INR 22,000 per gram. The Indian Bullion Jewellers Association or the IBJA is the key agency determining the gold rate per gram in India. IBJA members include the country’s biggest gold dealers, who have a collective hand in establishing prices. 

The online gold buyers keep an eye on the latest prices issued by IBJA. These members of IBJA take into account the entire legal gold sold and purchased in India. Indian banks are the major importers of gold who then supply this imported gold to bullion dealers across India. Banks supply the gold after adding their fees to the price, and hence, the final prices at which the bullion dealers get the gold is higher than the international prices.

Finally, the IBJA decides the final rate of gold. The bullion dealers bid for this gold, and IBJA takes the bidding average to determine the final price of the gold. This average is then further adjusted for taxes levied by the states, and hence, the prices vary slightly from one place to the other.

Conclusion

It is the standard process for determining the final price of gold. We hope this article has provided you with insight into who decides the gold jewellery price and how these prices get affected.

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