Hello, fellow readers good to see you back. Did you notice the gold prize today no right or even if you notice I guess you are still thinking that how does the price going high day by day in India for even for a small amount, we called TOLA i.e. 12.5 grams. Well in today’s article I am going to explain how the price of gold is decided in India and how it’s a good investments.

Indian’s perspective :

-        After doing some research and survey we Indians look at the gold more as an expensive metal to be wear as jewelry. Most of the Indians don’t think purchasing gold as a good investment. Most of the people in our country spend lot more money on gold jewelry.

-        The people saw towards gold as something like status in the society means the person who wears gold jewelry consider to be wealthy.

-        So the basic is we Indians don’t see gold as an investment.


Who decides the gold prices in India :

International gold prices are also a factor in gold prices in India. But it’s not the key factor in gold price though the key role in this is played by the IBJA (Indian Bullion Jewellers Associations). IBJA is the main board who is responsible for the gold process on day to day basis in our country.

IBJA is a board who includes the biggest gold dealers in the country, who have equal part in establishing the prices. These people have record of almost all the gold sold or purchased by legal ways in India, and they are located in all over the country. In India the gold is only imported by the banks then they sold this gold’s to the bullion dealers all over the country.

When the gold is distributed or purchased by the bullion dealers from bank the gold price they paid include the bank fee as well that makes the gold price to go higher than the prices of gold when it’s imported by bank.

The IBJA comes into the picture and then they started determining the price of gold by speaking with the top ten biggest gold dealers from the country. Based on at what rate the dealer has purchased the gold they provide a buy and sell prices to the IBJA.

Once all the dealers submitted their prices then the IBJA took the average of these prices and declare the prices for buy and sell prices for the respective day. Then the rate changes for each states based on the local taxes and state taxes.

Dealers generally arrive at their ‘buy’ and ‘sell’ rates by taking the international cost of gold and multiplying/adjusting it to the exchange value of the Rupee and adding any import duties and taxes such as VAT. Dealers ensure that they add their margin to the rates they give, keeping in mind their requirements. This procedure ensures that gold rates in India are on par with international trends and customers can purchase gold without any worry of being cheated with regards to gold rates.

Well that what the main perspective we saw who decided the gold prices in India. But what exactly is the factor that are considered in this price calculation.

Factors affecting the gold prices:

1)   Demand and Supply

It’s pretty much simple rule of economics that affects the price of anything in economy.

If there is large demand and less supply then the price of the good increases as the buying group is large.  In other hand if there is large supply and demand is less at that time then supplier drops the prices of the goods.

2)   Inflation

When the price of the currency inflated internationally then the prices of the gold also depleted. As the value of currency decreases the price of gold increases and vice versa.

3)   Banks interest rates

People keep their money in banks in form of deposits as an investment when bank gives a good interest rates. If due to any reason the interest rates drops and does not provide any profit to the customer they start buying gold from the money they save as part of investment.

4)   Change in international prices

As I already mention above the international prices also plays the role in gold prices in our country. When bank import the gold they pay the gold prices based on the international market price of gold. If the international gold price increases it directly impact the gold prices into the country.

5)   Economic fall down

Lets say if the country is in economic fall down at that time everything changes. The prices of the services goes much higher which results into the goods prices going higher. At that time the gold prices also goes higher or lower based on the condition of the economy. 

Since the gold is considered as the wealth in our country the gold prices in India are always higher than expected. Well this is the basic information on the gold prices in India which is available on every public domain. I hope after reading this post now you have an idea why gold is so much costly in India and keep getting costly day by day.

Thank you for reading this post and let me know if you find these article useful or not. Thank you readers have a good day 😊