Factors That Affect the Gold and Silver Rate in India

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Predominantly, prices of gold and silver, like any other commodity, fluctuate due to demand and supply. India stands strong as one of the highest consumers of gold and silver, globally for decades. This grave demand tends to dictate the price of precious metals, especially gold. When it comes to ornamental jewellery, India is the highest consumer thus prices of gold jewellery are slightly higher than elsewhere.
A few other factors that contribute to pricing and demand of gold in India:
International Gold Rate: The rate of gold works on International parity. That means the price of every 10gm of gold is uniform. Thus, the global rate of precious metals plays a chief role in where gold stands in India.
Hedge:  Gold apart from its ornamental form is also a popular investment. People and governments alike invest in gold in its pure form, as a protection against uncertainty. Gold has proven to be a stable currency over centuries and when all ‘hell breaks loose’ on currencies people have the tendency of returning, back to gold. The metal has a stable value and demand over the years and hence the price fluctuates depending on its influx as an investment. The prices of gold in the market are highly dependent on economic stability.
Gold vs Indian Rupees: The US dollar is the main currency in which commodities are traded. Given the fact that India is a primary importer of gold and one of the highest recorded consumer of jewellery, the gold is imported and purchase in US dollars. This currency is then converted to Indian rupees. Thus, the exchange rate difference of dollar over rupees is critical in setting the domestic consumption rate. The international rate being on a 5 year low, has still not seen same reduction of rate in India, as Indian currency has fallen 8% against the dollar since last February. Thus if you buy 10g of gold internationally it will cost you far lesser than in India.
Duty and Tax: The imposed duty and tax on gold and silver rates locally are also high in India. Since we are comprehensive importers the import duty levied and the cost of distribution adds to the gross precious metal rates.
Buying gold from Bullion India saves you from many ‘add-on cost’ of brokerage, registration and even delivery. The pricing of gold is also based on spot prices and are wholesale bazar rates. These lower rates and 24-carat gold and silver finesse ensure higher value for your money.

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