Today’s Gold Rate in Delhi

One should know that India isn’t a producer of gold but a consumer. This implies that the country doesn’t mine gold and relies heavily on imports to meet existing gold demand. Gold rate is decided by the London bullion association and IBA publishes the gold prices in US dollars which serves as a benchmark worldwide for bankers and bullion traders. 

In India, the Indian Bullion Jewellers Association (IBJA) plays a key role in determining day to day gold rates in Delhi or in the country as a whole. Gold in India is primarily imported by banks who in turn supply this to bullion dealers across India after adding their fee to it. IBJA takes the average of buy and sell quotes, and adjusts by adding local taxes to determine the gold rate in Delhi.

Also Read: How to Calculate Gold Price for Jewellery?

Prior to the GST implementation which was introduced on July 1st 2017 in the country, gold jewellery was subjected to 1% excise duty and 1.2% value added Tax (VAT). Moreover,  10% customs duty was charged on a gold product along with 5% tax on the processing charges which were around 12% of the gold price. After the implementation of Good and Services Tax, the buyer needs to pay 3% GST on the value of the gold jewellery in Delhi including making charges. Taxes on processing charges and customs duty remain unchanged at 5% and 10%, respectively. This is expected to bridge the gap between small and big jewelers thereby organizing the unorganized sections of the gold market.

Although there is no particular formula to know why MCX gold rate in delhi keeps fluctuating but there are some factors such as economic, social, and political which affects gold rate and they are discussed below:

• Inflation: Our currency tends to go down during inflation and it is seen during such situations, people tend to hold money in the form of gold. This increases the demand for gold which also drives up the gold rate in delhi.
• Interest Rates: The gold rate in delhi is dependent on the financial policy changes brought by the RBI which impacts the current gold rate in delhi. If the RBI hikes interest rate, then people start to sell their gold and vice versa.
• Geo-political crises: Recently it is seen how the prices of gold increased due to the outbreak of coronavirus in China, or the rising tensions between US and Iran or the US-China trade war. It is because gold is viewed as a source of safety and during such time, people start to park their funds in gold with this viewpoint.
• Dollar-rupee equation: International gold prices are set in dollars. A falling dollar will likely appreciate the price of gold in rupee terms and vice versa.

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Gold prices are expected to maintain upward momentum till the first half of the 2020. There are various factors which are contributing to the demand of gold; ongoing worries about the Coronavirus outbreak around the world, US-China trade war, and rising tension between the US-Iran.

• It is seen that gold prices always seem to benefit whenever the global economy faces a crisis. It was last seen in the first week of January when the escalating tension between the United States and Iran fueled the demand for gold. Gold prices have gained about 3% since the US killing of top Iranian military commander that has prompted investors to flee from risky assets.
• Gold prices have further gotten a boost due to concerns over the global economic fallout from the Coronavirus outbreak as investors are rushing to invest in safe haven assets. The sudden upsurge in the demand for gold is pushing gold prices higher not just in India but globally.
• Post Brexit economic uncertainties will continue for a while which is pushing up the prices of gold in India.
• In India, Investment demand for gold is going strong even though the physical demand remains slow. As per the World Gold Council data, gold ETFs are witnessing positive participation where it attracted inflow of Rs.200 crore in January, making it the highest infusion in seven years

Note: Gold is considered a safe-haven asset during times of economic and political uncertainties. As an investor, it is suggested to allocate 5-10% of your funds to gold.

Must Read: Impact of Covid-19 on Gold in India

Gold rates in India vary from city to city in India due to the main reasons listed below:

• Hauling cost and safeguarding charges of gold is expensive which further adds up to the gold price in delhi
• Gold rate is decided by the bullion association and every city has a seperate bullion association which is responsible for regulating the gold prices on a daily basis.

Gold is a symbol of wealth, but investors today also buy this yellow metal to diversify their portfolio, as it is a widely accepted fact that investment in gold will generate returns if kept for a long term. Here is you can invest in gold:

Coins/bars: One can get started with investing in gold through coins and bar as an investment. Unlike jewellery, it doesn’t come with making charges. One can either buy gold coins/ bars from a jeweller or through recognized MMTC outlets, bank branches and post offices but do make sure it comes with a buy-back facility.

Gold ETF: Also known as paper gold as it is stored in dematerialised form. It is similar to buying an equivalent sum of physical gold but minus the storage and making charges which physical gold carries. They are listed and traded on NSE and BSE and one can buy units through mutual fund houses such as SBI, HDFC, Reliance, to name few.  If you are trading through these mutual fund houses, one needs to have a demat account to get started. However, it is not needed if you are trading through recognised online portals such as Paisabazaar, ET money, etc.

Digital Gold: Mobile wallet platforms such as PayTm, Freecharge or Me-Gold(launched by Motilal Oswal) allows consumers to purchase gold from as low as Rs.1. All of these mobile applications are associated with MMTC-PAMP. Before investing, make sure you check the purity of gold given. Digital gold offered by MMTC-PAMP is 99.9 percent pure whereas SafeGold offers 99.5 percent purity.

Interested investors can get started with as little as Rs. 10 which is not possible in case of physical gold where one has to buy at least 1 gram of gold. Due to the small investment size, it allows people to invest in gold even with limited income.

Sovereign Gold Bonds: They are government securities issued by the Reserve Bank of India (RBI) and can be bought from banks, stock exchanges, designated post offices. For individuals, the investment limit is minimum 1 gram and maximum is up to 4 kg. The tenor of the bonds is 8 years with the exit option after the 5th year. Through this, investors can earn an assured rate of interest (2.5% currently) along with prevailing gold price at the time of selling.

Must Read: Invest in Sovereign Gold Bonds Or Physical Gold

Before getting started with investing in gold, investors should know certain aspects given below:

• Purity of gold is denoted in karats, with 24 karat gold being 99.9% pure and 22 karat being 92% pure and so on. Hallmark is an indication of purity and it is advisable to always purchase hallmarked jewellery as per the BIS standards
• Before paying for your gold jewellery, make sure you are charged for the gold weight and stones, if any, separately.
• Most jewellers offer a ‘buy-back’ facility where one can exchange their old jewellery for a new one or can get cash. It is important to check the same with the jeweller before buying gold coins/jewellery.
• Gold pricing is determined based on the purity of gold and it changes everyday based on the market rate. Before buying jewellery/coin, make sure you know the current gold rate in delhi and discount it based on the purity of the gold

Also Read: Hallmarked Gold, KDM Gold and 916 Gold – What is the Difference?

Bureau of Indian Standards (BIS), a governing body is authorised to certify the purity of gold through the hallmarking process. This helps to maintain legal standard of purity and ensures the gold you are buying conforms to the national and international standard of fineness and purity. Below are the components to look for at the time of buying gold

• BIS Mark
  • 24K= 99.9% Pure
  • 23K=95.8% Pure
  • 22K=91.6% Pure (Also called as BIS 916 gold)
  • 18K=75%
• Purity in Karat
• Hallmarking Identification number/mark

Gold, usually kept in the form of jewellery, often comes to the rescue during financial emergencies. One can easily get a loan against gold in Delhi through a number of banks such as SBI, ICICI Bank, Axis bank, HDFC Bank, etc. The bank will keep the gold articles as collateral and will sanction the loan amount based on the purity. Until the loan amount is repaid, the bank will keep the deposited gold in a vault. In return, the customer has to pay the interest on the loan amount. The interest rate of gold loan usually varies from bank to bank. For instance, the interest on gold is 10%-17.98%.