Gold, being a precious metal, offers extreme significance in Indian households. The metal maintains relevance even during times of financial emergencies, paving the way to obtain gold loans. This type of financing entails no end-use restrictions. Thus, you can use the loan amount to fund various financial requirements, whether personal or professional.
However, when it comes to gold financing, understanding the gold rate and valuation becomes a crucial consideration before making a decision. In this regard, you should note that the rate of gold is different in different cities due to various reasons.
Find about them below:
Being a physical asset, this metal requires transportation that comes at an extra cost. Moreover, certain items have to be transported to interior locations of the country. This transportation cost covers certain costs, such as fuel cost, personal expenses, vehicle expenses and more.
Apart from that, gold also requires heightened security regularly, which leads to added cost. In simple terms, the higher the cost of transportation of gold, the more costly gold will be in a particular Indian city.
If the demand for the metal is on the rise, the price of gold will rise subsequently on the same trend. This can be explained in two ways:
Household and industrial demand for gold
If demand for gold jewellery, coins, bars and other items decreases, its supply increases, which reduces the price of this metal. In industrial context, various medical and electronic device manufacturers require gold to produce goods. If the demand for gold from their side creases, the price of the metal would fall.
Investment demand for gold
This demand is driven by ETFs purchasing gold to meet requirements of investors. If the demand for digital gold from their end increases, it would drive the overall gold rate in the market eventually.
As the government purchases more gold, the price of gold tends to rise. On the other hand, increases gold exports will result in a downfall of gold rates in the country. For the Reserve Bank of India, gold is a vital asset as it drives the currency. If a country has rich gold reserves, it can uplift its currency substantially. However, increased imports can devalue a currency over an extended time period.
To waive this concern, the RBI increases import duty on gold. This brings down gold imports and, making gold purchases costly while preserving foreign reserves.
The value of the rupee against an international currency, such as dollar also plays an important role in determining the gold rate. If the value of rupee falls significantly in international markets, the cost of gold will rise in India. In the same way, if rupee appreciates, the cost of gold purchase will come down.
In addition to the above-mentioned pointers, certain macroeconomic factors also tend to affect the gold rate in Mumbai or other Indian cities. For instance, similar to other assets, the price of gold is deeply affected by demand and supply. That said, as demand for gold goes up, so does the metal’s price and vice versa.
Moreover, during times of economic uncertainties, the cost of gold rises as individuals seek to invest in gold as a medium of wealth creation.
Since gold holds a steady value as compared to currency, it is also considered a good hedge against inflation. Thus, during times of inflation, more and more individuals tend to invest in gold as a safe investment option, creating a rise in demand.
Apart from the above-mentioned points, a few other factors cause different gold rates in different cities, such as:
GST to buy or sell gold is 3%, which jewellers need to pay and is passed on to the customer. In addition, making charges of jewellery also attracts GST at 5%. This causes variations in gold prices in different Indian cities.
The Indian Bullion Jewellers Association (IBJA) also play a crucial role in specifying gold rates in India.
However, differing the price of gold in India, the metal is precious and can help you meet your emergency cash requirements. You can consider pledging your gold items and obtaining a gold loan at competitive interest rates from leading banks and financial institutions. For thorough research, consider resorting to Bajaj MARKETS, which is a diversified marketplace of various loan offers extended by leading lenders in the country. You can go through the terms and conditions of these offers and choose the one that best suits your requirements.
Evidently, the cost of gold at the state level is affected mainly by local taxes, transportation costs, gold purchase price and local jewellery associations. You can easily search the current rate of 1 gm of gold in your city online. It is crucial to know the current gold rate in your city, as it will help you make informed decisions in terms of financial emergencies.
Share
Tweet
