Gold Rate in India

Gold is a yellow precious metal that allures people with its magnificent charm and beauty. Over the years, the significance of gold has increased/ grown as it symbolizes growth and prosperity due to which Indians are attracted to it. In India, gold is not just a metal that helps people enhance their beauty, but is considered as an emotional asset, having sentimental values associated with it. Indians consider buying gold on auspicious occasions such as Dussehra, Diwali, Akshaya Tritiya and many other festivals. Weddings in India too are incomplete without gold jewellery and people simply can’t get enough of this precious metal. Due to this, India has become one of the largest consumers of gold, accounting for almost a quarter of gold’s global consumption.

Today, gold being the super metal that it is, can provide multiple solutions and act as a knight in shining armour as it can be easily sold in case of a financial crunch. Gold has not only attracted women but also investors who are dictated by the everyday-changing gold rates.

Even when investments in the economy market do not seem to be a good idea, gold serves as a safe haven for investors because as a commodity it never disappoints. To buy gold in India, an investor has to be updated with the gold rates that are largely affected by the demand and supply of it. To know the gold rate in India, all an investor needs to be is conduct a search online and the gold rates are displayed on the screen in no time.

How is Gold Rate Determined in India?

In India, a celebration without gold is considered dull and lacklustre. Irrespective of the gold rates, buying gold is considered a tradition due to which people are ready to shell out more money to meet the commanding gold rates. While buying gold, one needs to know that gold rates do not change due to an individual or an authority who guides them. There are a few factors that dictate gold rate and determine the ever-changing prices that an individual pays to buy it. Based on the fluctuations in the market, the gold rates are subjected to change.

  • Dollar dynamics: Gold rates are heavily dependent on currency factor as on the basis of USD. Gold rates are inversely proportional to US dollar due to which when the USD climbs up, gold rates are likely to go down. When US dollar weakens, gold prices are likely to climb up. US dollar plays an imperative role in determining gold price because the central banks that maintain US dollars tend to hedge the risk of devaluation of the dollar due to increasing gold investments. Any direct or indirect changes in the US currency leads to a change in the Indian gold rates. India purchases gold from US, so when US dollar strengths against the Indian rupees, the gold purchase is likely to get expensive.

  • Supply: Supply of gold is not constant and witnesses a drastic change from time-to-time due to which people have to manage with the available quantity. More supply of gold makes gold a less dear metal in India. If the supply equation changes, the prices can witness a huge change.

  • Production costs: If the gold mining companies increase the production costs, the gold rate is likely to go high in India.

  • International relations: Bad geopolitical relations between nations can have a huge impact on gold rates as the supply of gold can get affected which will eventually lead to an increase in the price of the gold. Hence, healthy global relations play an imperative role in determining the price of gold.

  • Gold reserve measure: Central banks across the world reserve gold for future use. The Reserve Bank of India does this too. Hence, when the central banks acquire more gold for reserves, the gold prices are subject to rise.

  • Increasing demand: Heavy imbalance in the demand and supply ratio leads to an increase in the gold rate. In India, gold rates increase during the time of festivals, wedding and other auspicious ceremonies as during such time, the demand for gold is high.

  • Inflation: Gold is mainly purchased to be used as a weapon against inflation. However, when inflation witnesses an upward trend, the gold rates too witness an all-time high.

  • Economic instability: Gold prices usually go high during the times of economic instability as gold can easily devalue other assets due to its liquidity factor that holds value even during the times of distress. Due to economic instability, people tend to invest money in gold investment rather than opting for other risky assets.

  • Low-interest rates on FD: Bank FDs are considered as one of the go-to investment options for Indians. However, when FD rates decline, gold becomes a favourite mode of investment, thereby witnessing more demand and eventually a price hike. However, no matter the price, gold continues to be a precious sought-after metal irrespective of the above factors and oscillating prices.

Who determines the gold rate in India?

There is no such kingmaker in India that determines the gold rate. The Indian Bullion Association, widely known as IBJA plays a key role in determining the rate of gold in India. The members of the IBJA take a collective decision in establishing gold rates in India. International gold prices do play a prime role in determining the Indian gold rate which may not be exactly the same as the international one. In India, gold is supplied to banks, who, in turn supply the same to gold dealers at an additional fee that increases the gold rate. The members of the IBJA speak to the top dealers of gold in the country to obtain the ‘buy’ and ‘sell’ quotes of gold. Based on the average of the buy and sell quotes provided by the dealers, the members of IBJA determine the gold rate for that particular day. The average rate is adjusted for local taxes and the gold rate is arrived on accordingly.

The gold dealers arrive at the buy and sell quote by accounting the international cost of gold and adjusting it with the exchange value of the rupees in addition to the import duties and taxes.

Various Gold Options Available in India

As we know, gold is one of the most preferable investment options in India. However, since there is a plethora of investment options available for investing in gold, you should understand the available gold options that are likely to give you high returns.

  • Gold jewellery: Buying gold jewellery is one of the preferred and widely used gold investment options since people usually invest in gold jewellery with an urge to wear it or to celebrate some special occasion. However, the return cost of gold jewellery is lower than the buying cost due to the making charges. At the time of buying gold, the making charge is included in the buying charge and hence while selling it off the making charge is not considered. There is also no guarantee of the gold rate remaining the same as they are subject to change even the next day.

  • Gold coins and bars: Gold coins and bars promise high returns as there is no making charge involved in it. However, one has to be careful while investing in gold coins and bars as buying it from a jeweller can turn out to be bogus. One can also buy gold coins and bars from a bank, but cannot sell them back to the bank. Whereas, gold coins and bars purchased from a jeweller can be sold back to the jeweller.

  • Gold ETF: Gold ETF stands for Gold Exchange Trade Fund. It is a type of individual stock which invests in gold as a commodity ETF and its units are listed on the stock exchange. Gold ETFs can be purchased from the Stock Exchange by simply opening a Demat and trading account. Brokerage fee will have to be borne by the investor..

  • Gold Mutual Fund: Gold Mutual Fund is a type of fund that invests in Gold ETFs on the behalf of the investor. An individual opting for a gold mutual fund does not require to open a Demat account or a trading account. Investing in a gold mutual fund can be done just like any other mutual fund. However, the investor will have to bear the fund management charges of Gold Mutual Fund scheme or Fund of Fund scheme.

Why is gold a good investment option?

Due to its globally recognized value, gold continues to be a good investment option attracting a large number of gold buyers on a daily basis. Anything made of gold is considered precious and worthy of possession. However, gold is not just known for charming the wearer, but also as a good investment option that adds value to the financial portfolio of an individual.

Here are a few reasons that make gold a good investment option:

  • Liquidity: Gold can be easily converted to cash anywhere, anytime. It hedges the investor during the times of emergencies and distress.

  • Value: The value of gold stays the same over time. Even though gold rates change on a daily basis, the value of gold stays unaffected even in the long-run. Due to this very reason, gold is considered to be a good investment option.

  • Hedge against inflation: When the inflation rises upwards, there is also an increase in the gold rate. Hence, during such a time, investment in gold is preferable than in any other asset.

  • Gold reserves: Gold reserves are maintained to back the paper currencies that eventually attain value on the basis of the gold reserves backing them.

  • Diversified portfolio: Adding gold to your investment portfolio lowers the overall risks of your investment. Since the gold rate is inversely proportional to the value of currency values and the stock market, it further qualifies to be one of the best investment options.

  • Tradition: In India, giving gold is mainly used as a way of financial transaction providing financial stability to the person presented with it. The tradition of giving gold is prevailing in India since ages now.

  • Versatile metal: Gold is used in the production of various jewellery items, gift items, bars, electronics, coins, fabrics, etc. During the time of increase in demand of these valuables, gold rates are likely to go sky high.

How is Per-Gram Gold Price determined in India?

The per gram gold rate in India is determined on the basis of the following factors:

  • Currency: When INR slips against the dollar, the gold rate rises in India.

  • International factors: International factors such as global development, global economic instability and dollar prices rising against currencies of other nations lead to an increase in the gold rate.

  • Demand for gold: If the demand for gold is on the rise, the gold rates are subject to increase.

  • Rate of interest: If the rate of interest increases in foreign countries, the current gold rate in India falls due to which there is a high demand and an eventual increase in the rise of the gold rate.

How to check gold purity?

Gold is not just an ornament but also an investment option where people invest their hard earned money. Thus, one should be sure about the purity of gold one is buying as many can also get duped in the process. Ideally, gold’s purity is measured in Karat categorized as 24K, 22K, 18K, 14K and 10K. However, it is important to understand that jewellery or ornaments cannot be made of 24K gold. This is because 24K gold is very soft and delicate as it is 99.9% pure and has 0.1% other metal or alloy content in it.

Purity of gold can also be measured in percentage and parts per thousand. To convert karats into percentage, an individual will have to divide the karat number by 24 and multiply by 100. For example: If an individual wants to check the purity of a 22K jewellery piece, then he can divide 22 by 24 the result of which is 0.9166. 0.9166 then has to be multiplied with 100 which gives 91.66 as the result. Hence, 91.66 % is the purity of gold content in the ornament.

Here are few karat values and their percentage equivalents

  • 24K- 99.9% (999)
  • 22K-91.7% (917)
  • 20K-83.3% (833)
  • 18K-75% (750)
  • 14K-58.3% (583)
  • 10K-41.7% (417)

Gold purity can also be checked by considering the below factors:

  • Look for the hallmark: All gold products are stamped with a hallmark that specifies its karat and weight. The hallmark is usually found on the back or clasp of the jewellery piece. Jewellery is stamped with the purity mark followed by the letter ‘K’. To check the gold purity, place the jewellery piece under a magnifying glass and check for the hallmark stamp.

  • BIS mark: BIS mark is usually used as a standard stamp for knowing the purity of gold. Every real gold item carries the BIS mark.

  • Check for discolouration: Check the gold purity by noticing any discolouration. If the piece is gold plated, it will have some discolouration.

  • Use a ceramic plate: Drag the gold items across the ceramic plate and if it leaves a black mark, the gold is not real. A gold streak indicates that the gold is real.

  • Make use of a magnet: Gold is a non-magnetic material. If you want to check gold purity, then make use of a magnet and check if it pulls the gold towards it.

What is the difference between 24 K, 22K and 18K gold in India?

A gold jewellery piece having high karat signifies the high purity of gold. Gold is a soft metal that is usually mixed with copper and other metals to attain form. The purity of gold is measured in karat with most common being 24K, 22 K and 18K gold.

  • 24K gold: 24KT gold is not 100% gold and consists of 99.9 per cent pure gold having 0.1 per cent distinct yellow colour metal mixed in it. The 24K gold is more expensive than 22K and 18K gold.

  • 22K gold: 22KT gold is mostly used in making jewellery and is considered more durable. 22K gold consists of 91.67% K gold and has other metal or alloy mixed in it.

  • 18K gold: 18KT gold consists of 75% gold and the rest 25% of other metals and alloys mixed. This type of gold is mostly used in making diamond studded jewellery.18K gold is less expensive than 24K and 22K gold.

Taxes on Gold

Depending on what the gold is used for, the Income Tax Act of India specifies for levying of taxes. Gold imported in India is subject to customs duty that is payable up to 10% of the total value of gold. In addition to this, processing charges of up to 5% are levied. Gold being sold in India is subject to GST (Goods and Services Tax) that is set at 3%. So, at present, tax payable on gold today stands at 13%.

Any profit made from the sale of gold is taxable. For jewellers and dealers, gold is taxable under ‘Profits and Gains of Business or Profession’ of the Income Tax Act, Whereas, for individuals, the profit gained from selling gold is taxable under ‘Capital Gains’ of the Income Tax Act.

The Income Tax Act also specifies that the profit made from sale of gold bars, jewellery, coins and utensils is taxable under ‘Capital Gains Tax.

Gold received as gift is tax exempted if the value of it is less than 50,000.

In case, if no profit is made while selling the gold, it is treated as capital loss.

Type of GainHolding time/periodCapital Gain Tax RateExemption
Short term capital gainGold bought and sold within a time period of 3 yearsTaxed as per the applicable rateNone
Long term capital gainGold bought and sold after a period of 3 yearsTaxed a 20% with applicable surcharge and education cessExemption available only if net proceeds are invested in section 54EC bonds or section 54F i.e. investment in property in the name of the spouse.

Physical Gold vs. Gold ETFs vs. Sovereign Gold Bonds

To help an individual make a profitable gold investment, here is a brief comparison between Physical gold, gold ETFs and Sovereign Gold Bonds.

FactorsPhysical GoldGold ETFsSovereign Gold Bonds
Safety Physical gold is not safe and is highly susceptible to theft. Purity is also a major concern. Is highly safe as it is stored electronically in a DEMAT account.These bonds are also kept in DEMAT account and are safe.
InterestNo interest is givenInterest rate varies depending on the companies that offer ETFs.Interest rate is offered depending on the rates specified by the Reserve Bank of India.
StorageStorage related issues can be a cause of concern.Requires no storage space.No worry about the storage factor here.
Loan optionLoan can be easily availed.Loan can be availed here too.Loans cannot be availed.
LiquidityIs highly liquidable. Gold ETFs can be liquidated during trading sessions. However, liquidating Gold ETFs does not provide a higher selling cost. These can be purchased from local banks or trade exchange. However, cost of trading is too low compared to physical gold.

Gold Trading as a Commodity in India

Today, India is one of the biggest gold consumers in the world followed by US and China. Gold trading in India has rapidly increased and has become one of the highly traded commodities in the commodity exchanges of India. Gold in India is traded without possessing gold in physical form accounts.

Gold is traded as a commodity on the below 3 popular commodities exchanges:

  • Multi Commodity Exchange (MCX)
  • National Commodity & Derivatives Exchange (NCDEX)
  • National Spot Exchange (NSEL)

These exchanges are governed by the Forward Markets Commission.

To trade a gold commodity and to gain maximum benefits, one must understand the key component and do proper calculation of the loss and profit it offers. Gold commodity trading depending on the gold contracts.

Gold spot contracts: This means that the gold is purchased and sold immediately.

Gold future contracts: This means gold is purchased and sold at a later date with trading being done on spot prices and not on the basis of demand and supply.

Gold commodity trading is done on the basis of margin, margin changes based on market volatility and current face value of the gold contract.

What makes gold a wise investment choice in India?

  • Gold is considered as a hedge against inflation
  • Gold is considered as a beneficial asset to possess in times of economic instability.
  • Gold is ideal for diversification.
  • Demand for gold highly increases during Indian festivals and wedding season.

Gold Futures Contracts on MCX

Established in 2003, Multi Commodity Exchange (MCX) is an independent commodity exchange based in India. MCX also serves gold commodity trading, offering alternative gold contracts.

  • Gold:

    • Ticker Gold
    • Carries a trading unit of 1 kg with maximum being 10kg
    • Trading can be done 6 months in a year i.e. February, April, June, August, October and December
    • Gold quality: 999 and 995 purity
    • Daily price limit:3%
    • Limit on positions: upto 2.5MT for individual clients higher being 12.5MT
  • Gold Mini:

    • Ticker GoldM
    • Carries a trading unit of 1 kg with maximum being 10kg
    • Trading can be done 6 months in a year i.e. February, April, June, August, October and December
    • Gold quality: 999 and 995 purity
    • Daily price limit:3%
    • Limit on positions: upto 2.5MT for individual clients higher being 12.5MT
  • Gold Guinea:

    • Ticker GoldGuinea
    • Trading can be done any time in a year
    • 1 unit=1 gram of gold
    • Limit on positions: upto 2MT for individual clients or up to 250,000 contracts at one time
  • Gold Petal:

    • Trades in months as specified by the exchange
    • 1 contract = 1 gram of gold
    • Limits on positions: Up to 2,000,000 contracts at one time

Impact of QE on Gold Rate

Quantitative easing widely known as QE can be defined as a monetary policy used by central banks to stimulate the economy when standard monetary policy become ineffective. The new money swells the size of the bank reserves which make banks to offer more loans and boost investments. The supply of the extra money leads to an increase in the gold rate.

QE affects all type of gold investment options in India and also affects the global market. Due to QE, gold rates soared high from 2009-2014 and is largely done in the countries such as Europe and Japan.

Impact of GST on Gold Rate

In 2017, GST changed the face of transactions and billings done by jewellers across India. A fixed rate of 3% was fixed as GST on gold jewellery. Before the introduction of GST, jewellers paid 10% as a customs duty, 1% excise and 1.2 % VAT. These taxes summed to a total of 12.43%.

However, on introduction of GST on gold at 3%, 10% customs duty, the total gold rate came to 13%. With the effect of GST, buyers now have to pay 0.57% tax more compared to the taxes applicable before the introduction of GST.

Why is gold rate increasing in India?

Due to a number of factors, the gold rate in India is rising, which has made it one of the most precious metals to possess.

  • Influence of US dollar: US dollar plays a major role in determining the gold rate in India. When the US dollar goes up, the price of gold decreases in India and vice versa. Change in the value of the dollar has a huge impact on the Indian gold rate.

  • Instability of the Reserve Bank: Monetary instability such as demonetization makes gold a dear asset. Hence, during an economic instability or a situation like demonetization, gold becomes more of a valuable asset when compared to paper money.

  • Demand and supply: Demand of gold is one of the major reasons why gold rate witnesses a major increase. If the supply of the gold is not constant to the demand, the gold rates increase.

  • Gold production: Expected production of 165,000 metric tons in the whole world's gold supply is met with a mere production of 2,500 metric which affects the gold rate.

  • Government taxes: Any increase in the tax rate on Gold leads to a push on the gold rates.

Why are gold rates different in various cities of India?

Gold rates vary across different cities in India due to the below reasons:

  • Hauling costs: Every item available in the market including gold attracts transportation costs. The transportation cost is added to the selling price. Hence, depending on the state and city, the gold transportation is carried in, the gold rates vary.

  • Volume play: Discount provided on bulk buying leads to variation in the gold rate in various states and cities. Gold rate in cities like Mumbai, Delhi, Chennai and others is higher compared to other cities.

  • Purchase price: A jeweller can sell gold purchased earlier at a high gold rate if, at the time of buying, the price was low.

  • Local association: Every state and city in India has local associations that have a say in the setting of gold rate on any given day.

  • Carriage: Gold import at port cities is lower than interior cities due to which gold rates vary.

  • Taxes: Some states levy heavy taxes on gold in comparison to others. This is one of the main reasons why gold rates vary from state to state.

Things to check before buying gold in India

There are several factors that contribute towards gold being a high-value asset. However, buying gold is not easy and one needs to keep the below things in mind:

  • Cost per gram: When out for buying gold, check the cost per gram rate as it gives you a fair idea of the current market price. Gold rates vary every day in every state and city. You can easily check gold rate online on any trustworthy website.

  • Gold purity: Gold is available in different purity levels that have a huge impact on its price. For instance, 24K gold will cost you more compared to 22K and 18K gold will cost you less when compared to 22K.

  • BIS certification: Gold that is not embodied with the BIS mark is not real. There are over thirteen thousand BIS hallmark jewellery showrooms in India that are responsible for ensuring gold meets the quality standards and is real.

  • Making charges: In simple terms, making charges mean the labour charges involved in curating a jewellery piece. Making charge is applicable to every jewellery piece and a buyer could be made to pay out a high making charge than necessary. So always insist your dealer on giving you a fixed making charge.

  • Machine and manmade ornaments: Today jewellery pieces are made using a machine which involves less making charges compared to man-made jewellery pieces. Hence, while buying gold, always discuss if the jewellery piece you are purchasing is manmade or machine made.

  • Buyback: Jewellery stores in India offer buyback options wherein individuals can exchange old jewellery piece to get a new one. Though the value of gold remains the same, knowing the buyback options could prove to be beneficial in the future.

  • Ask for a bill: To make your gold buying process transparent, make sure you ask for the bill. In case you want to sell the gold in the future, the bill can be useful and be of help in case of any discrepancies.

How to Sell Gold in India?

Gold being a liquid asset can be sold to jeweller or pawn shops. Individuals who wish to sell gold should know about the current gold rates and failing to do so can result in selling gold at lower gold rates. Gold coins and bars attract a better rate than jewellery pieces as they involve no making charges. Gold loans can also be availed against gold coins as banks and financial institutions provide attractive interest rates on it. Selling gold in India also requires an individual to show the buyer the bill of the jewellery as it specifies the worth of the gold and also its purity. Jewellers or pawn shops in India usually do not accept gold that does not have a proper invoice.

How to store gold safely in India?

The best way to store gold in India is at the bank. You can rent a locker at a bank and keep your gold safe. However, storing gold at bank lockers makes it impossible for you to access it on public holidays and weekends as banks are shut on these days. Also, banks do not offer guarantee against theft or fire. So, it is advised to store gold in electronic form. Storing gold in electronic gold is the safest option and requires you to open a Demat account. If you have e-gold then you can easily get involved in the process of buying and selling it. Since gold rate prices in India change every day, you can keep a track on every day changing gold rates and get involved in the trading accordingly.

Gold Weight Conversion Table

To convert fromToMultiply by
TonnesTroy ounces32150.7
Troy ouncesGrains480
KilogramsTolas85.755
KilogramsBahts68.41
KilogramsTroy ounces32.1507
Troy ouncesGrams31.1035
Million ouncesTonnes31.1035
KilogramsTaels26.7172
Troy ouncesPenny weights20
Troy ouncesAvoirdupois ounces1.09714
Avoirdupois ouncesTroy ounces0.911458
Short tonneMetric tonne0.9072
GramsTroy ounces0.0321507

FAQs on Gold Rate

Do I need to have a bank account for buying a gold coin in India?

If you are buying a gold coin from a bank in India, then you need to have a bank account with the bank.

Does gold rate play an important role in sell and purchase of gold ornaments?

Yes, gold rate does play an important role in the sale and purchase of gold ornaments.

Can I bring gold from an international country in India?

Yes, you can bring gold from an international country in India. However, female passengers cannot carry gold worth more than 1 lakh and male passengers cannot carry gold worth more than 50 thousand.

Can I sell gold purchased in India globally at the current gold rate?

Yes, you can sell gold purchased in India globally at the existing gold rate in the country where you are selling it.

Does 24K gold offer a good resell value?

Yes, 24K gold does offer a good resell value.

How can I know the gold rate today?

To know the gold rate today, you can do a search and can easily look for the gold rate in your state or city.

What makes the gold rate unstable?

Gold rate oscillates each day due to the fluctuations in the market.

Does hallmark gold rate differ in comparison with the normal gold rate?

No, the hallmark gold rate does not differ in comparison with the normal gold rate. Difference between hallmark gold and normal gold is its quality and purity.

If the gold rate today is more then can I sell the gold today or should I wait till tomorrow?

Gold rate changes each day. So, if you think that the gold rate today is more and is subject to a rise in the future, then you can sell the gold tomorrow or even at a later date.

Does an increase in the QE affect the gold rate in India?

Yes, increase in the QE in any country affect the gold rate in India.

Has demand for gold in India grown over the years?

Yes, the demand for gold in India has grown by 15% in 2017.

Can I check gold rate live in India?

Yes, you can check gold rate live in India on TV channels or online on any trustworthy website.

Is the gold rate in India low when the gold rate in a foreign country is high?

No, the gold rate in India is not low when the gold rate in the foreign country is high.

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