Today’s Gold Rate in Bhopal

The Goods & Services Tax on Gold in Bhopal is 3% which is applied on the price of jewellery plus the making charges.

Pricing of Gold is not a direct process like in the case of pricing other assets. Gold prices are fixed on a daily basis at London Bullion Market Association. IBA (ICE Benchmark Administration) publishes the LBMA gold price in US dollars twice daily at 10:30 AM and 3:00 PM UK Time which serves as a benchmark price for gold producers, investors and central banks worldwide.

In India, the Indian Bullion Jewellers Association (IBJA) takes the international price of the gold as a base and adds applicable taxes. Afterwards, an organization of bullion dealers across India decides at which rate the gold will be sold to retailers.

Gold rates in Bhopal are affected by certain factors which are given below:

1. Rise/Fall in Import Duty: Gold rate in Bhopal depends on the current import duty. Since India is one of the biggest importers of Gold, any change in the import duty will affect the gold price in Bhopal.
2. Political Upheavals: In times of political upheavals, there may be a fall in the currency value as well as in financial products. But, the demand and gold prices tend to rise amidst political tensions. For instance, the outbreak of Coronavirus (COVID-19) and rising tension between US-Iran has led to a significant rise in the gold prices. Consequently, Gold is considered as a safe option by the investors during such economic uncertainties.
3. Inflation: During inflation, many people prefer to park their funds in gold due to its capability to hedge against inflation. This leads to increased demand which in some way affects gold rate in Bhopal to increase.
4. Interest rates: Interest rate and gold rate share a negative correlation. When banks increase interest rates, people start to park their funds in fixed investment which affects the demand for gold to go down.
5. Rupee & US-Dollar equation: The relationship between rupee and dollar affects the gold prices in India whereas it has no such effect on global gold rates. Any kind of change in this equation has a direct impact on the gold rates in Bhopal and across India.

One can own gold in its physical form as well as in the paper form. Gold Jewellery, Bars and Coins are known as the physical forms of Gold whereas Gold ETFs and Gold Mutual Funds constitute its paper form. Some of the gold investment options are discussed here-

1. Gold Jewellery: Gold jewellery is mostly purchased for consumption purposes but is considered as an investment in itself. However, before investing in gold via  gold jewellery, one has to consider a lot of factors such as safety and storage. Moreover, the making charges and GST are not recoverable at the time of selling it.

From where can you buy gold jewellery?

• One can either buy jewellery through their nearby jewellery store or through online such as Bluestone, Caratlane, etc.

Note: One can avail the gold saving schemes offered by jewellers such as Tanishq, Jos Alukkas, Malabar Gold, etc. Here the customer needs to make the fixed deposit every month for a particular period. After the end of the tenure, jeweller will either add 75% of the monthly installment or one month installment to the already accumulated deposit. Through this scheme, one can buy gold jewellery from that amount

2. Gold Coins or Gold Bars: Another way of owning physical gold is purchasing gold coins or bars from jewellers, banks, non-banking finance companies or e-commerce stores. One can buy coins in different denomination such as 5 gm, 10 gm, 20 gm, 50 gm and in different purity as per your budget

From where can you buy gold coins?

Nearbuy jewellers, banks, e-commerce websites such as Amazon, Paytm, etc. and non-banking finance companies. One can also buy from MMTC outlets where you can sell back the gold coins in future if you want.

3. Gold Exchange Traded Funds (ETFs): If keeping gold in physical form is an issue; owning gold in paper form could be for you. One such way to invest in gold is through the Gold ETF. One can buy and sell these funds at the stock exchange provided one has a demat account. The investment in Gold ETF is backed by physical gold of 99.5 percent purity.

How to invest in an ETF?

• These funds are listed on stock exchanges (BSE/NSE) and can be purchased or sold like stocks.
• To sell and purchase ETFs, you must have a trading account and a demat account.

4. Sovereign Gold Bonds (SBGs): They are issued by the RBI on the behalf of the government. It comes with a tenor of 8 years with an exit option available after 5 years. Moreover, one can earn a fixed 2.50% which is payable every six months. If kept until maturity, they are exempted from capital gains tax. One thing to know, unlike other investment options, they are not available ‘on-tap basis’ but can only be availed when the government opens the purchasing window which is usually done twice in a year.

How to invest in Sovereign Gold Bonds

• One can buy SGBs from designated banks and post offices after completing your KYC with them
• One can invest a minimum of 1gm and maximum up to 4kg in a financial year.

5. Gold Accumulation or Digital Gold: E-wallets such as Paytm and GoldRush offer the customers to accumulate gold in digital form from as little as 1 gram. When gold prices appreciate, you can redeem the accumulated gold either for money or for coins/bars. If you choose the latter option, delivery and making charges needs to be paid upfront.

How to start Digital Gold investment?

• Minimum investment requirements vary from one platform to another. For instance, Paytm requires a minimum investment of Rs.1 but the minimum amount on GoldRush is Rs.1,000.
• Depending on the amount, a gram of gold will be added to your wallet.
• When prices of gold appreciate, you can sell the accumulated gold provided the sale window is open and prevailing gold value will be credited to your account.

6. Gold Mutual Funds: Mutual Funds have gained popularity recently and these are also one of the best ways to invest in gold while eliminating the need to hold it in the tangible form. Gold Mutual Funds allocate the assets in gold-producing companies or in gold bullions and units of a Gold Exchange Traded Fund (ETF). These are suitable for the investors who are willing to invest in gold as an asset class but do not have a demat account and are looking for more liquidity than Sovereign Gold Bonds.

It is to be taken into account that Gold Mutual Funds offer no tax rebates to the investors. Long-term capital gains (LTCG) are taxed at 10% and Short-term capital gains (STCG) are taxed according to the applicable income slab of the investor. Best 5 gold mutual funds are- SBI Gold Fund, Kotak Gold Fund, HDFC Gold Fund, Aditya Birla Sun Life Gold Fund and Nippon India Gold Savings Fund

Investment tip: Investors are suggested to use a dynamic approach while investing in gold. They must invest highly in gold mutual funds only during bearish markets. And, investments must be shifted to other better asset classes as and when the market regains. 

How to invest in a Gold Mutual Fund?

• Visiting the nearest branch office of the fund house and investing in the desired scheme.
• If you want a hassle free mode of investing with no commissions and brokerage, you can go directly to the websites of the respective fund house or any financial service providing websites like Paisabazaar.

Here are some important points which must be taken into consideration before purchasing gold-

• Quality and Purity of Gold: It is very important to determine the purity and quality of gold. It is measured and indicated in ‘Karats’. 24Karat (24KT) is known as the purest form of gold available in the market. Purity of gold is one of the factors which affect the price of gold. But 24K gold cannot be moulded into coins and bars or Jewellery, hence 22K can be considered next to pure.
• Hallmarking: The Bureau of Indian Standards (BIS) has regularised the process of certification of purity of gold called Hallmarking. The basic purpose of hallmarking is to provide evidence of purity of gold. While purchasing physical gold, one must always look for the BIS hallmark to ensure that it is pure. This will ensure protection of investors against adulteration.
• Making Charges: Making charges of gold can be understood as the labour charges including styling, designing, cutting and finishing. This cost varies from one type of gold jewellery to another. One can bargain and negotiate for a reduction in the making charges. Customers must compare the making charges before purchasing any product.

To ensure the purity of gold jewellery, as advised by BIS, the customer must check-

1. BIS Mark
2. Purity in Karat and fineness corresponding to different purity level
   • 958-23 Carat
   • 916-22 Carat
   • 750-18 Carat
   • 585-14 Carat
3. Jeweller’s Identification mark/number
4. Assaying and Hallmarking Centre’s Identification mark/number

Note: It is to be noted that from January 2021, it will be mandatory for the jeweller to sell only hallmarked 14K, 18K, 22K gold jewellery.

One can take a loan against gold in case of any financial emergency or to meet short term credit needs. Financial institutions such as Muthoot, Manappuram, etc. and various banks offer gold loans in Bhopal. The loan is sanctioned on the basis of its purity, weight of gold and the loan amount requirement. In return, the borrower needs to pay the interest on the loan and until it is paid, the gold will be kept in a secured vault.