Does the craze of buying gold in India need any introduction? We guess NO! This metal is famous throughout the world for its rich history and value. People in India have continued to show interest in gold for multiple reasons throughout the decades. Be it social value or economic investment, the worth of gold is unmatched. Before you try to earn some cash for gold, let us discuss the fluctuating gold prices for once and all.
No matter the GDP or current inflammation rate in India, people will be buying gold every month. But why are the gold rates different in multiple urban cities?
To be precise, the gold rate in India largely depends on the International market. Therefore, the price should be the same across the whole country. What could be the possible reasons behind the price change from one urban area to another?
After thinking a lot and looking into it, there are quite a few contributors to the variation of gold prices throughout India. The most talked-about factors are mentioned below-
1. Hauling Cost
Transportation cost might be the most significant parameter of determining the gold price in different cities. Just like every product available in the market, hauling cost alters the selling price. The physical movement of a precious metal like gold from one place to another needs security arrangements and custom clearance. The more is spent on the procedures, the higher will be the price of gold.
2. There Might Be Discounts When The Quantity Is High
There are times when specific discounts are available on the purchase of bulk gold. It might happen when a gold merchant is buying directly from a vendor. On the other hand, when a vendor purchases bulk gold from MCX, they often get a discounted price that is lesser than the retail segment.
3. Involvement Of Gold Bullion Association
Just like every other segment, jewelry also has its association known as the Gold Bullion Association. It regulates the gold’s price structure regularly. The value of cash for gold get fixed twice a day. It mainly depends on the previous day’s last rate and the current range of the international gold market. But when the calculation of other incurred costs like custom price and marginal pricing is done, the value differs from one city to another.
4. Government’s Role On Import Duty
The Government of India also plays a vital role in the bullion trade. Well, the Indian government finalizes not only the tax rates but also the import duty rates. Essentially, India does not make mine gold. We import it from another country, and hence we have to pay the import duty cost, which plays a pivotal role in fixing the selling price of gold. Import duty largely relies on the surplus or deficit of the currency pooling. For example, the import duty will rise if there are a deficit and vice versa.
5. The Current Value OF Rupee
The rupee’s current market worth against the dollar currency also plays quite an essential role in the price of the gold. The gold’s price increases when the rupee’s worth falls in the international market and the gold price will fall when the value of the rupee increases.
The gold price has been fluctuating throughout recent years. Either it is too high, or the other way around. Therefore, when you sell gold for cash, evaluate all the aforementioned parameters to understand what you can expect from the market now.