Gold Price in India

Gold Rate in India

Gold is deeply valued in Indian culture, symbolizing wealth and prosperity. It's essential for festivals like Diwali and indispensable in wedding shopping. To check daily gold prices, simply search online.

In India, gold is not just cherished for its beauty but also as a solid investment. While many buy jewelry, experts suggest investing in gold coins, bars, or ETFs to avoid extra costs like making charges.

Gold prices vary daily and across different cities in India, influenced by global market trends, the U.S. dollar's strength, and local factors such as taxes and transport costs. Knowing these factors can help you make smarter gold purchase decisions.

What is Hallmark Gold and How is it Determined?

In 2000, the Bureau of Indian Standards (BIS) initiated a hallmarking system to certify the purity of gold jewelry. This program was introduced to give buyers confidence in the authenticity of their gold purchases. From June 23, 2021, hallmarking became a compulsory practice for all gold items sold in India.

A hallmark confirms that a piece of gold jewelry has been thoroughly tested in accredited labs and adheres to international purity standards. Each qualified piece of gold jewelry bears a hallmark. This hallmark consists of the BIS logo, a purity grade that specifies the gold content, and a symbol of the assaying center where it was examined. These marks help consumers verify and trust the purity of their gold purchases.

Determination of Hallmark Gold

The process of hallmarking involves several steps to ensure the gold’s purity and authenticity:

• Assaying: The gold item is tested to verify its authenticity and purity at a recognized assay office. This involves a detailed analysis to determine the exact gold content in the item.
• Marking: Once the purity is confirmed, the item is stamped with a hallmark. This hallmark typically includes:

1. Bureau of Indian Standards (BIS) logo: This indicates that the item has been certified by the BIS, the official body responsible for hallmarking in India.
2. Purity Mark: This shows the purity of the gold, such as "916" for 22-karat gold, indicating 91.6% pure gold.
3. Hallmark Unique Identification Number (HUID): A unique six-digit number that can be used to verify the authenticity of the hallmark through the BIS CARE app.
4. Documentation: The details of the hallmarking process are documented to provide a traceable record of the quality assurance process.

What is the Difference Between Karat and Carat?

The terms Karat and Carat are often confused due to their similar pronunciations, but they refer to entirely different measurements in the context of jewelry:

Karat (K or Kt)

It is a measure of the purity of gold. Karat indicates the proportion of gold in an alloy out of 24 parts. For example, 24-karat gold is pure gold, while 18-karat gold is 18 parts gold and 6 parts other metals.

Carat (Ct)

It is a unit of weight used for gemstones and diamonds. One carat is equivalent to 0.20 grams. It is used to measure the weight of diamonds and other precious stones. For instance, a diamond weighing 1 carat would be heavier and generally more valuable than a diamond weighing 0.50 carats.

Difference between 22 Karat and 24 Karat Gold

When purchasing gold, it’s crucial to understand the differences between the 22K and 24K gold. Below, we have highlighted the key differences between the two:

Purity

24K Gold: It contains 99.9% pure gold. There is no other metal mixed in this.

22K Gold: It contains 91.67% pure gold, with the remaining 8.33% consisting of other metals like copper, silver, nickel, or zinc.

Durability

24K Gold: 24K is quite soft and very malleable as it’s pure gold. This quality makes it less ideal for everyday jewelry that requires durability, as it is prone to scratching and deformation.

22K Gold: The addition of other metals makes 22K gold harder and more durable than 24K. It is therefore suitable for jewelry like rings and bracelets that are worn regularly.

Usage

24K Gold: Its high purity and vibrant yellow color make it highly desirable for investment purposes, in bullion form like bars and coins. It’s also used in electronics and medical devices due to its excellent conductivity and non-reactive properties.

22K Gold: It is commonly used in making high-quality jewelry, especially in cultures where gold jewelry is a traditional gift, such as in Indian weddings. It strikes a balance between purity and practicality, making it a preferred choice for jewelry that is worn often.

Why is the 22K Gold Rate Lower Than that of 24K?

The reason 22K gold is less expensive than 24K gold boils down to its purity and what’s mixed in. 24K gold is pure gold, which means it's 99.9% gold without any other metals. On the other hand, 22K gold is made up of 22 parts gold and 2 parts other metals like copper or silver, bringing its purity down to 91.7%.

These added metals make 22K gold stronger and more practical for items like jewelry, but they also dilute its purity, which lowers its price. Additionally, since 24K gold is the purest form, it's in high demand for investment and industrial uses, which keeps the gold price higher.

Sovereign Gold Bond Scheme

The government of India introduced the Sovereign Gold Bond (SGB) Scheme in November 2015 under the gold monetization scheme to offer an alternative to physical gold. Here’s a breakdown of the key aspects of this scheme:

Over time, fewer people have been buying physical gold. Sovereign Gold Bonds (SGBs) not only follow the price changes of gold but also offer clear details about the investment.

SGBs are safe government securities. Their value is based on the amount of gold they represent, measured in grams. More investors are choosing SGBs as an alternative to owning physical gold. If you want to buy, you just need to contact a broker or agent approved by SEBI. When you decide to cash in your bond, the money, based on the gold's current market price, will be transferred to your bank account.

Key Features of Sovereign Gold Bonds

Below, we have highlighted the main features of Sovereign Gold Bonds:

• Eligibility criteria: Any Indian resident - individuals, trusts, HUFs, charitable institutions, and universities - can invest in SGB. You can also invest on behalf of minors.
• Issuance of bonds: The Reserve Bank of India (RBI) is the only entity that can issue SGBs on behalf of the Central Government, and these bonds are available for trading on the Stock Exchange. They are issued in units starting from one gram of gold. When you buy these bonds, you'll receive a Holding Certificate, and you have the option to convert this into a Demat form.
• KYC documentation: To buy SGBs, you need to complete the same Know-your-customer (KYC) procedures as you would when buying physical gold. This involves submitting identity and address proof, like a PAN Card, passport, driving license, or Voter’s ID.
• Capital gains: The interest you earn on SGBs is taxable under the Income Tax Act, 1961. However, if you redeem the SGB, you won’t have to pay tax on the capital gains if you're an individual. Also, if you hold the bonds long-term, you can get benefits that reduce the taxes on any profit you make when selling or transferring the bond.
• Eligibility for SLR: If banks use the bonds as a guarantee (through lien, hypothecation, or pledging), they can count it towards their Statutory Liquidity Ratio (SLR). SLR is the reserve requirement that banks need to maintain before they can lend, including cash, gold, and approved securities.
• Redemption price: The amount you get when you redeem the bonds is calculated in Indian rupees. It’s based on the average closing price of 999 purity gold over the last three working days before the redemption.
• Sales channel: You can buy these bonds through banks, the Stock Holding Corporation of India Limited (SHCIL), and certain post offices as announced. They can also be bought and sold on recognized stock exchanges like the National Stock Exchange of India or the Bombay Stock Exchange, either directly or through intermediaries like brokers.
• Commission: Offices that sell the bonds charge a 1% commission on the total amount subscribed. They share at least half of this commission with the agents or brokers who help in selling the bonds.

What is Digital Gold in India?

Digital gold refers to the purchase of gold online, where the equivalent amount of physical gold is stored in secure, insured vaults by the service provider. This gold is typically 24K, ensuring high purity (99.99%).

Here are the key features of digital gold:

• Investment flexibility: Investors can start with very small amounts, even as low as one rupee, making it accessible to a wide range of investors. There is no upper limit on investment, although some platforms may have specific caps.
• Ease of transactions: Digital gold can be bought, sold, and transferred online at any time. This provides high liquidity and convenience to investors. It can be easily converted into physical gold, coins, or bullion, and delivered to the investor's doorstep if desired.
• Collateral for loans: Digital gold can be used as collateral for loans, as it is recognized for its purity and secure storage.
• Platforms and providers: IT can be purchased through various online platforms such as Paytm, PhonePe, Google Pay, and websites of stockbrokers and trading platforms. Notable providers include MMTC-PAMP, SafeGold, and Tanishq Digital Gold, each offering their own platforms and services

How to Check Gold Purity in India?

Here are some methods to check gold purity at home and ensure you avoid buying fake gold:

• Hallmark Check The hallmark is a simple way to verify the purity of gold. Each gold item is marked with a hallmark that shows its purity, either in karats or as per the Millesimal Fineness system, as certified by the Bureau of Indian Standards (BIS). You can usually find these marks on less noticeable parts of gold items like the backs of ornaments, inside ring bands, or near necklace clasps. Manufacturers also add their unique mark. This method doesn’t cost anything and can easily be done at home.
• Magnet Test Gold is not magnetic, so using a simple magnet from home can help test its purity. Place a magnet near your gold jewelry; if it attracts, the gold is mixed with other metals and is not pure. Pure gold, or high-karat gold like 22K or 24K, won’t stick to a magnet. This test is quick and easy.
• Float Test Gold is a heavy metal and will sink if placed in water. If you drop your gold jewelry into a bucket of water, genuine gold will immediately sink. If it floats or hovers, it might not be pure. However, this test isn’t completely reliable since other heavy metals can also sink.
• Acid Test For a more precise home test, use an acid kit, which you can use with care in a well-ventilated area. First, rub the gold on a testing stone. Then, apply a drop of nitric acid to the mark left on the stone. If other metals are present, the mark will dissolve. If the mark doesn't change, your gold is likely pure.

How to Buy Gold Coins in India?

Buying gold coins in India is a popular investment option, and here are the steps on how to do it:

• Choose a reputable seller: Buy gold coins from trusted sources such as banks, certified jewelers, and authorized dealers. Popular banks that sell gold coins include the State Bank of India, HDFC Bank, and ICICI Bank. Reputable jewelers like Tanishq and PC Jeweller also offer certified gold coins.
• Check purity and certification: Ensure the gold coins are pure and certified. Look for coins that are 24 karat (99.9% purity) and come with a hallmark certification from the Bureau of Indian Standards (BIS). Certification assures you of the coin's purity and authenticity.
• Determine the weight: Gold coins in India are available in various weights, typically ranging from 1 gram to 50 grams. Choose a weight that fits your budget and investment goals.
• Compare prices: Prices can vary based on the seller and market conditions. Compare prices from different sellers to get the best deal. Keep in mind that apart from the market value of gold, there might be making charges, although they are usually lower for coins than for jewelry.
• Look for buyback terms: Check if the seller offers a buyback policy. This is important if you decide to sell the coins in the future. Understanding the terms can help you assess the resale value.
• Consider safe storage: Once you purchase gold coins, ensure you have a safe place to store them. Use a safe deposit box at a bank or invest in a good quality safe for your home.
• Keep receipts and certificates: Always keep the purchase receipts and purity certificates safe. These documents are crucial for insurance purposes or if you plan to sell the coins later.

Why are Gold Prices Rising in India?

The reason why gold rates are rising in 2024 can be attributed to several key factors:

• Rupee-dollar exchange rate: The exchange rate between the Indian rupee and the U.S. dollar plays a crucial role. Gold is priced in dollars, so when the rupee weakens against the dollar, gold becomes more expensive in India. This can lead to higher prices even if global gold prices remain stable.
• Cultural demand: In India, the demand for gold typically spikes during the festive and wedding seasons. With these seasons approaching, the anticipated surge in demand is likely to continue pushing prices upward.
• Inflation: When inflation rates rise, the value of currency decreases, which often leads investors to buy gold. Since gold is considered a good hedge against inflation, its value tends to increase as the purchasing power of currency declines.
• Tax and import duties: The Indian government imposes import duties and taxes on gold imports. If these duties are increased, the additional costs are passed on to consumers, leading to higher retail gold prices.
• Economic policies: Decisions by the Reserve Bank of India (RBI) regarding interest rates can influence gold prices. Lower interest rates make savings less attractive and gold more appealing, which can increase demand and push prices higher.

Gold Trading as a Commodity in India

Gold trading has emerged as a significant aspect of commodity trading in India, with gold becoming a primary commodity on the nation's commodity exchanges. Investors can engage in gold trading through three major commodity exchanges:

• Multi Commodity Exchange of India Ltd. (MCX)
• National Multi Commodity Exchange of India Ltd. (NMCE)
• National Commodity and Derivative Exchange (NCDEX)

These exchanges, located throughout India, provide electronic trading and settlement systems and are regulated by the Forward Markets Commission.

Gold Future Contracts on MCX

MCX India offers a range of gold futures contracts, catering to various investor needs:

• Gold: This contract involves trading units of 1 kilogram with a maximum order limit of 10 kilograms. An individual can hold a maximum open position of either 5 metric tonnes across all gold contracts or 5% of the total market-wide open positions, whichever is higher.
• Gold Mini: The Gold Mini contract has trading units of 100 grams and also maintains a maximum order size of 10 kilograms. The limits on maximum permissible open positions are the same as those for the standard Gold Futures Contracts.
• Gold Guinea: Each Gold Guinea contract represents 8 grams of gold, making it suitable for investors with small capital. The maximum open position allowed is the same as for the larger contracts — either 1 metric tonne for all contracts combined or 5% of the market-wide positions for individual customers.
• Gold Petal: Designed specifically for small investors, each Gold Petal contract consists of just 1 gram of gold. Similar to other contracts, the maximum open positions allowed are equivalent, and an investor can purchase up to 2,000,000 Gold Petal Contracts.
• Gold Global: This contract is pegged to international gold prices and targets exporters, jewelers, refiners, and major players in the bullion market. It was introduced by MCX in July 2015 and aligns with the global gold pricing, providing a relevant tool for large-scale market participants.

What is the Present Import Duty on Gold?

As of the latest updates, the present import duty on gold in India is structured as follows:

Total Import Duty: 15%

• Basic Customs Duty (BCD): 10%
• Agriculture Infrastructure Development Cess (AIDC): 5%

QE Impact on Gold Price Today in India

Quantitative easing, often called QE, is a factor that influences gold prices in India. QE involves increasing the money supply in the economy to boost consumption. When global central banks buy securities, they introduce more money into the economy. This extra money often ends up being invested in gold, which drives up its price.
Recently, the amount of QE around the world has decreased. The US has finished its QE phases, while countries like Japan and parts of Europe are still engaging in it through their central banks.
Right now, it's unlikely that there will be new QE initiatives in these countries. However, if the global economy faces liquidity issues, gold prices might drop. Conversely, when QE is phased out, as seen in the US, gold prices might also decrease. This could impact the price of all forms of gold, including the popular 916 gold in India.

How is the Gold Price Per Gram Determined in India Today?

The gold price per gram in India is determined by a combination of global and domestic factors. Here’s a detailed breakdown of the key elements that influence the gold price:

• US dollar value: Gold is traded globally in US dollars. Therefore, fluctuations in the value of the US dollar directly impact gold prices. A weaker dollar makes gold cheaper for other currency holders, increasing demand and prices, and vice versa.
• Rupee-dollar exchange rate: Since India imports most of its gold, the exchange rate between the Indian Rupee (INR) and the US Dollar (USD) is critical. A weaker rupee makes gold more expensive in India, while a stronger rupee can lower the price.
• Local demand and supply: High demand during festive seasons and weddings can drive up prices. Conversely, lower demand can lead to price drops. Also, limited supply due to mining restrictions or import regulations can increase prices. Conversely, an abundant supply can lower prices.
• Import duties and taxes: The Indian government imposes import duties and taxes on gold. Changes in these duties can significantly impact gold prices. For instance, higher import duties increase the cost of gold.
• Role of the Indian Bullion Jewellers Association (IBJA): The IBJA plays a key role in setting the daily gold price in India. It averages the buy and sell quotes from its members, who are major gold dealers, to determine the daily gold rate.

Mathematical Formula to Calculate Gold Prices

The gold rate in India can be calculated using two mathematical formulas depending on the purity of gold. The two formulas to calculate gold prices are as follows:

• Purity Method (Percentage)Gold value = (Gold rate x purity x weight)/24
• Karats Method Gold value = (Gold rate x purity x weight)/100