Gold has great significance for us. It is an investment choice for many, and a valuable asset in every stage of life for many cultures, beginning from birth, birthdays, engagements, marriage ceremonies, and religious festivals. But you will find one thing interesting while purchasing gold i.e. the gold rates are different in different cities.
For some people, this fact related to the difference in gold rates may confuse them. Thus, it is time to look for the possible causes for such differentiation and focus on the factors that stimulate the growth of the distinctions in gold rates in India
Read More: https://www.giva.co/blogs/tales/why-gold-rates-are-different-in-different-cities-in-india
Factors Affecting Gold Rates
1. Government Duties and Tariffs
Import Duty on Gold
A major portion of gold in India is imported and this import duty imposed by the central government bears direct relation with gold prices in the country. If there is an issue in foreign countries that may include shifts in import duty can result in changes in rates with each city responding to those changes in the taxes of its own jurisdiction.
State-Level Taxes and Levies
However, state taxes and levies may also apply to gold for import besides duties that are within the central taxes of India. As expected, gold prices in cities in the states with higher taxes are higher than in the states with lower taxes.
2. Logistics and Transportation Costs
14K Gold Trinity Heart Diamond Ring Impact of Distance from Major Gold Import Points
Gold is imported mostly into cities that have major seaports, for instance, Mumbai and Chennai. Cities that are farther from these ports incur higher transport and logistics charges which are passed on to the prices of the gold.
Infrastructure and Transportation Efficiency
Another factor is that better cities could have superior transport networks and this could reduce the overall cost of transporting gold hence improving on the prices. On the other hand, regions with low transport infrastructure may incur additional costs thus increasing the local price.
3. Retailer's Margin
Role of Jewellers and Retailers in Price Determination
Retailers have a major influence on the market price of gold products at the country level. As for competition and the retailer’s own policies, the margins can also change, and therefore, the price of gold for the consumer.
Competition and Market Dynamics
Jewellers, for instance, might cut down their margins to reach more people in highly competitive markets, thus can be a factor that results in price reduction. On the other hand, in markets where there are few competitors, the retailers may sustain high margins and lag in cutting their prices.
4. Local Jewellery Associations
Gold Classic Floret Diamond Ring
Influence of Associations on Price Standardisation
Local jewellery-making organisations can have the role of setting or suggesting the gold prices for the given region. These associations take into consideration of several factors, such as the global price of gold and the demand for this item locally to ensure that there is a standard rate within that region.
5. Purchase Price of Gold
Impact of Previous Gold Purchase Price on Current Rates
Price can be defined and implemented in many ways by the jewellers with the most common approach being pegging the price on the acquisition price of the gold. When a jeweller purchases gold at a higher rate, he will not adjust his prices downwards even if the international rates decrease. This can give rise to flexibility concerning the pricing depending on the existing gold inventory in the retailer’s stock.
6. Dependence, supply, and quantity of gold in the different regions
14K Gold Joyful Butterfly Diamond Bracelet
Regional Variations in Gold Demand
Some cities have high demands for gold jewellery as compared to other cities because of various factors. Where there is a high market volume, for instance during festivals or wedding seasons is likely to be much higher due to a higher uptake. In contrast, in the cities where the demand is low, the prices may be more stable.
Impact of Supply Chain Issues
Golds’ supply chain is vulnerable to disruptions attributed to logistics problems or for political reasons which may result in scarcity hence escalating its retail price in the affected areas.
7. Devaluation of the Rupee and US Dollar
Correlation Between Gold Prices and Currency Exchange Rates
The prices of gold in India are also determined by the exchange rate of the Indian Rupee against the US dollar. Since gold is traded internationally in dollars, when the rupee dips in value it costs more rupees to buy gold, and on the other hand, a rising rupee can help put down the price.
8. Central Bank Gold Reserves
Indirect Impact of Central Bank Policies on Gold Prices
It is worthy of note that the Reserve Bank of India (RBI) has the major authority in controlling gold stock in India. Also, changes in central banks’ gold positions can be considered as affecting market sentiment and therefore prices. Local prices may also be affected by changes in monetary policy or by expenditures of stocks in the worldwide supply of gold.
Does GIVA Have Different Gold Prices for Different Cities?
Several determinants make up the price of gold in India apart from governmental policies and taxes such as logistical factors and demand-supply imbalance. Knowledge of these factors enables you to make the right decision each time you want to invest in gold.
But, if you are asking if GIVA has different gold prices for different cities, then you must know that we have the same rate around the whole country. Whether you are living in Delhi or Kerala, you have to pay the same price. And to be clear, GIVA does not include any extra cost or additional charges on buying gold & silver jewellery from their store. You can buy exquisite gold jewellery without making a hole in your pocket!
