Gold is among the widely used precious metals in India. It is used in weddings, birthday parties, and religious festivals. Indian temples have ancient gold idols, and it shows how revered gold is in Indian culture.
The rate of gold in India is determined by international gold prices. It means that any changes in international prices will directly impact the prices in India. Unfortunately, that does not happen in India. For instance, the gold rate in Trichy will be different from the gold price today in Coimbatore. That is because there are certain variables in play.
The reason behind different gold rates in India
The difference in gold prices in different cities leave sellers confused, and it gets difficult for them to find the best place to sell gold. Here are the reasons to understand the different gold prices in India.
- State government’s local taxes
Each state in India has its own set of rules and taxes on gold. This is one of the major reasons why we see variations in gold prices in different cities, such as the gold rate in Trichy would be different from the today gold rate in delhi.
The goods and services tax (GST) is to bring uniformity in gold taxes and prices in all states of India. However, that change is yet to come.
- Transportation cost
Hauling costs are levied for gold metals available in the market. Unfortunately, the transportation cost is charged to customers by adding it to the selling price. Given the gold’s great value, there is an added cost of safety and security to the final selling price.
- Big volume factor
It is a common practice among vendors to offer a discount in case of a bulk order. If someone buys gold in big volume, he will likely have it at a lesser rate than other gold buyers, which leads to a further decrease in gold-selling prices. That is the reason behind the gold price today in Coimbatore and Mumbai.
- Gold associations’ influence
Every state has a gold association that regulates the price structure. For example, the gold rate in Trichy is influenced by the gold association there. The associations regulate the prices twice a day, which is why we see price differences in different cities while looking for the best place to sell gold.
- The government’s influence on gold
You may wonder, what is the role of our government in the gold trade. Well, we do not have gold mines, and most of our gold is from other countries. The government levies import duty and taxes which affects the gold price in the Indian market. So, if the gold price today in Coimbatore has soared, it is also because of the increase in import duty.
- The value of the Indian rupee against international currency
The fluctuation of Indian currency against other currencies also determines the price of gold in India. If the value of the Indian currency against the US dollar decreases, the price of gold increases significantly and vice-versa
Gold was the top-performing asset in 2020, but the prices in India have declined since August 2021. However, it is expected that the gold prices in different cities may soar again. Investment for the long-term would be a wise decision.