Gold Rate In India Today

Gold is a valuable commodity and is also one of the most preferred forms of investments in India. As a global store of value, gold acts as a hedge against inflation. In fact, many times when equities have faced a downhill, gold has given high returns, indicating an inverse correlation with equities. Correspondingly, gold can be a good portfolio diversifier.

Investment in gold can be done in many ways. One can simply purchase physical gold like jewellery, bars and coins or can invest through gold Exchange Traded funds, mutual funds, and sovereign gold bonds. But before investing in gold, one should be aware of the basics about gold prices and its impact on investment to make the best of it.

Gold rates change on a daily basis. The changing price of gold depends on various factors ranging from economic aspects to global drifts. Some of these are movements in the US dollar, import costs, economic stability, demand-supply, etc. In India the gold prices vary by city mainly due to local taxes, gold associations, transportation costs, etc.

Let’s have a look into the factors that affect the gold rate in India:

• Import Costs -

Gold is mainly imported in India. So, import costs affect the gold rate. Higher the costs, higher the price of the gold.

• Interest Rates On Bank Fixed Deposits -

Fixed deposits (FD) in banks is a popular investment option for Indians. When FD rates fall, investors prefer to move their money to gold. As the demand for gold rises the prices too show an increase.

• US Dollar -

Gold is denominated in U.S. dollars. The price of gold is inversely proportional to the value of the U.S. dollar. Additionally, the rupee-dollar equation also has a role to play in Indian gold rates.
When USD strengthens against other currencies like the Indian rupee, the value of other currencies decreases, causing a lesser demand for commodities like gold. As a result gold becomes cheaper. Contrarily when the US dollar weakens, gold rates in India rise.

• Global Economic Stability -

Gold is considered a safer asset. During economic instability, when other assets see a drop in value, there is a positive impact on gold prices. So people move their money out of riskier assets into gold.

• Inflation:

Gold is bought to hedge against inflation. So when the general prices of goods and services show an upward trend, the gold prices also tend to rise.

• Supply -

Supply constraints can push prices upwards.

• Seasonality -

In India, the demand for gold is more during festivals, marriages, and other auspicious occasions. So, generally there is a jump in the prices during these times.

Gold prices in a country are also determined by the gold reserves of its central bank or the government. So, if a country exports gold after maintaining high gold reserves, the gold prices in the home country reduces and its currency strengthens. But countries with low gold reserves, import more gold causing a drop in the value of their currency. India mainly imports its gold from foreign countries. So, the government sometimes imposes a high import duty to preserve foreign reserves and decrease the import bill.

The import duty is borne by the consumer who has imported the gold. The Indian government has set a limit of 1 kg of physical gold. Any import above 1 kg is taxed heavily.

Gold prices are fixed twice a day, once at 10:30 a.m. and once at 3 p.m., by the London Gold Market Fixing Limited. Bids are collected from buyers and sellers and accordingly the price is decided for the day. USD is the currency generally used when quoting prices.

In India, gold prices are determined by the Indian Bullion Jewellers Association (IBJA) “bid” and “ask” quotes. Once the price of gold is fixed by the IBJA on a daily basis, taxes and other charges are added to it. All these costs together determine the price of gold on any given day.

Conclusion

Gold is intricately woven into the culture of India, making the country the largest gold consumer of the world. It is held as a reliable instrument for investment. But since these investments are dictated by the prevailing gold rates in the economy, it is advised to be well-informed about the gold prices before making any kind of purchase.

Gold prices have been soaring ever since 2020, post COVID-19 outbreak. In 2023, the gold prices continue to show an upward trend. The price of gold has been on the rise in recent times crossing record highs of over Rs 60,000 for 10 grams of 24k gold (99.9%).

Considering the current trend of global gold prices in 2023 investing in Gold ETFs may be a wiser option. It is a virtual way of investing and can be done through UPI transactions or internet banking. Also, it is mandatory to have an online Demat and trading account to buy or sell ETFs.

IIFL Finance offers its customers both trading and Demat accounts facilities. And do not worry about hidden costs, IIFL Finance provides complete transparency with respect to fees and all services related to the Demat account.