Trivia 19 Jun 2018
Ever wondered why the price of gold not only varies across towns and cities but also amongst different jewellery stores within the same city?
This is because gold prices in India vary according to the ever-changing market dynamics.
In India, gold prices are not determined through a formal exchange.
There is no single authority in India that sets a standard nation-wide gold price. But the gold price announced daily by the Indian Bullion Jewellers Association (IBJA) is recognised by gold dealers across the country . This is an average of the prices obtained on that day from ten large gold dealers Some of these dealers use the near-month gold futures contract on the Multi Commodity Exchange of India (MCX) , others provide a mark-up price over the cost they paid for buying gold from the importing bank. The interplay of inter-state transportation costs and price announced by local jewellery associations also plays a key role in determination of prices across different cities and towns .
Jewellers typically refer to this announced gold price while calculating the final price of the jewellery. This price is multiplied by the weight of gold used in the ornament and then making charges are added to it. A 3% GST is then levied on the calculated sum . Some jewellers even charge a premium for purity and brand.
Few things to keep in mind before buying gold jewellery:
Given the mechanics, the following factors influence the market price of gold:
Knowing the basics of how gold is priced will help you better understand the estimate provided by your jeweller. You can now have an informed conversation with him on the rate he quotes, given the weight and purity of gold in question and the price published in the newspaper.
Also, don’t forget to ask for a transparent invoice providing a proper break-down of the cost of your purchase.
The Shanghai Gold Benchmark Price, or Shanghai Gold Fix, is the result of an auction held twice daily on trading days by the Shanghai Gold Exchange (SGE), at 10:15 am and 2:15 pm, Beijing Time. The Shanghai Gold Exchange facilitates both on-exchange and off-exchange gold contract trading as well as a daily gold price auction and gold leasing.
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