Gold Rate Today in India

Gold is the most precious metal for Indians and a preferred choice in the form of jewellery. Many investors prefer them in other forms like gold coins, bars, gold ETFs, digital gold, etc. Also, buying gold on festivals and occasions is considered to be auspicious. Furthermore, buying gold acts as a hedge against inflation whenever there is a fall in the economy. Thus, the gold rate in India fluctuates and is affected by many internal and external factors.

Factors Affecting Gold Rate in India

The following are the factors that affect gold rate in India – 

• Demand and Supply: The demand and supply affect the gold rate in India. High demand for gold and low supply tends to increase gold prices in India.
• Interest Rate: The interest rate is another crucial factor that affects gold prices in India. It has an inverse relationship with interest rates. Therefore, when the interest rates increase, the gold rate in India falls and vice versa. 
• Currency Fluctuations: Gold is traded in USD in international markets. So when the US dollar falls, the gold prices in India rise and the gold prices will fall when the US dollar strengthens. 
• Global Factors: These factors include global economic development, volatile prices, dollar strengthening, etc. For instance, during economic instability, gold prices increase because people move their money into gold, which is considered a safe investment. 
• Inflation: A rising inflation means a falling currency rate and rupee depreciation. This increases the gold prices in India. Therefore, gold acts as the perfect instrument to hedge against inflation. 
• Government Reserves: The Government of India holds gold reserves where RBI buys and sells gold. The gold prices fall or rise depending on the price and quantity of gold traded by the government. 
• Import Costs: The demand for gold in India is primarily met through imports. Also, India is one of the largest consumers of gold in the world. Thus, these import duties directly affect gold prices. 
• Seasonality: The demand for gold is higher during festivals, marriages and auspicious occasions. Gold prices tend to be high during these times. 

Why is the Gold Rate Different in Different Cities in India?

The following are the reasons why gold rates are different in different cities in India – 

• Taxes: The state taxes vary across different states, where some states levy higher taxes than others. This is one of the reasons why the gold rate is more expensive in some cities than in others.
• Demand: Due to varying population sizes and demographics, the demand for gold also varies. Discounts are available on larger volumes. For instance, the gold rates in Mumbai are lower due to a significant quantum of transactions. 
• Carriage: Usually, India imports gold in bulk by sea. Gold prices in port cities are lower than in the interior cities due to the absence of inland transport charges. For instance, the gold rate in Chennai (port city) can be lower than in Delhi. 
• Local Association: Every city has a gold association that sets gold prices every day. This will also lead to different gold prices in different cities. 

How is the Gold Rate in India Determined?

Indians have a fascination towards gold. Gold is the most cherished metal and is flaunted in the form of jewellery on every occasion. But the gold rate in India is not fixed. It fluctuates every day based on market conditions. 

There are several ways that affect the gold rate in India, which helps to determine the gold prices. One of the primary reasons is the geopolitical situation across the globe. For instance, when the Presidential elections were held in the USA, the price of gold rallied initially and then fell again. It was because investors felt that equity shares were performing better. Later on, investors understood that the new President’s policies might be volatile, leading to a gold price hike. There are several other factors that determine the gold rate in India – 

Currency 

The currency performance is the major determinant of global prices of this metal. And the most important currency is the USD. If USD appreciates, then gold rates are likely to move down worldwide. Domestically, when the Indian rupee is stronger, gold prices are lower. 
Also Read How Gold Affects Currency Value?

Global Changes 

The gold rate in India is dependent on the global prices of this metal. Also, India imports most of its gold. Therefore, whenever there is a change in the global rate of gold, the import prices are also altered accordingly. Moreover, the market price of gold in India is a reflection of import prices. 

Gold Reserve 

All nations have a central bank that holds gold and currency for future use. In India, the Reserve Bank of India also has a gold reserve. Therefore, when these banks across the world acquire more gold for reserve, it leads to a rise in gold prices. 

Overall Demand

There are certain reasons for the rise in consumer demand for gold. For instance, the demand for gold is higher during a wedding season or festival. When the demand is more, there is an imbalance in the demand-supply ratio. This leads to a rise in gold rates. 

Apart from the above factors, several other factors determine the gold rate in India. At a particular time, the gold price will also depend on interest rates and inflation in the country. Hence, the price of this yellow metal will continue to fluctuate for several reasons. 

What are the Various Gold Options Available to Buyers?

The following are the various gold options available to buyers – 

• Physical Gold: The most popular form of buying gold is in the form of gold jewellery, gold bars and coins. The gold bars and coins are 24 Karat purity whereas gold jewellery is 22 karat or lesser purity along with making charges. 
• Sovereign Gold Bonds: They are issued by RBI and are denominated in grams of gold. They are a good substitute for the risk of holding physical gold. 
• Gold ETFs: The underlying asset for gold ETF is gold, and its value depends on the price of physical gold. Also, one gram of gold equals one unit of gold ETF. The trading happens on the stock exchange. 
• Gold mutual funds: These are open-ended mutual funds that invest in units of gold ETF where the price of the gold fund is in terms of Net Asset Value (NAV). 
• Digital Gold: This is an alternative to physical gold where every unit of digital gold purchased is 99.99% pure gold. 

Read in detail about the types of gold investment options. 

Physical Gold Vs Gold ETFs Vs Gold Funds Vs SGB – Which is Best?

Parameter	Physical Gold	Sovereign Gold Bond	Gold ETF	Gold Fund
Safety	Low	High	High	High
Purity	High – Coins/bars Low – jewellery	High	High	Nil
Liquidity	High	After 5 years	High	High
Minimum Investment	Approx INR 5000 (1 gram gold)	Approx INR 5000 (1 gram gold)	Approx INR 5000 (1 gram gold)	INR 500
Conversion	Coins/bars into jewellery	Not possible	ETFs into physical gold	Not possible
Charges	Making charges for jewellery	Brokerage charges if held through demat account	Expense ratio and brokerage fees	Exit load and expense ratio

What is the difference Between 24k and 22k Gold?

The 24-karat gold is the purest form of gold which contains 99.99% of pure gold. There is no other higher form of gold other than 24K gold. It is only used for investment purposes because it is a very soft metal. On the other hand, 22-karat gold is 91.67% pure gold mixed with other metals to make it harder. Thus, it is suitable for jewellery making. 

Read in detail about Difference Between 24k and 22k Gold

How is the per-gram gold price in India determined?

A combination of factors like supply, demand, global conditions, interest rates, currency fluctuations, investor behaviour, and many more determine the per-gram gold price in India. Also, the gold association sets the gold price every day.

Is digital gold safe?

Yes, digital gold is safe because it is in a digital format and stored in an insured vault.

When is the best time to invest in gold?

The best time to invest in gold is when the gold prices are expected to fall or are lower than the average gold rates for a particular period.

Read more about

• Digital Gold vs Physical Gold
• Gold ETF vs Sovereign Gold Bond
• Physical Gold vs Gold ETF
• Sovereign Gold Bond vs Physical Gold
• Physical Gold vs Gold ETF

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