Today’s Gold Rate in Hyderabad

Gold rates are set daily twice in a day at 10:30 am and 3 PM in London Bullion Market Association (LBMA) and on the basis of which the prices of gold (and silver too) are valued and traded throughout in the world.

Gold prices are derived from London Over-the-counter market and COMEX gold futures market trading. One should note that supply and demand for physical gold plays no role in setting the gold price in these trading markets. IBA (ICE Benchmark Administration) publishes the LBMA gold price in US dollars which serves as a benchmark for gold producers, consumers, investors and central banks worldwide.

Gold rates in India are dependent on the international gold market in London. However, gold rates in Indian cities differ from each other. Below are some of the factors and variables which contribute to the change in gold prices in Hyderabad:

Custom Duty: India does not mine gold and imports hugely to meet the demand here in the domestic market. In the last union budget 2019, custom duty was increased from 10% to 12.5%. Increase in custom duty makes gold prices costlier.

Hauling/ Transportation costs: The cost of safeguarding and hauling cost of gold is expensive and is added to the sale price which impacts the price of gold in Hyderabad.

Bullion Association: Prices of gold also differ on account of different jewellery associations in India. Bullion or jewellery associations are responsible for regulating the gold prices on a daily basis which is done twice in a day.  The gold prices are calculated by taking international gold prices at that particular time plus incurred cost which leads to the variation of prices in different cities.

Value of rupee: International gold prices are set in dollars in London Bullion Market Association (LBMA). The value of the rupee against the dollar in that particular period plays a very important role in the pricing of the gold. A falling dollar will likely appreciate the price of gold in rupee terms and vice versa.

International prices have a bearing on gold cost in Hyderabad, though the rates might not be the exact same as they are internationally. The consumer won’t get the gold at the same price across nation as there is no standard rule for pricing and invoicing gold ornaments through the country. The Indian Bullion Jewellers Association (IBJA), apex jewellery and bullion body, plays a key role in determining day to day gold rates in Hyderabad as well as in the whole country.

Multi Commodity Exchange (MCX) is an independent commodity futures exchange market which offers trading in varied commodities including bullion. It calculates the gold rates in a similar way as that the IBJA does. However, it is dependent on international price, conversation of troy ounce to grams, supply & demand for gold in MCX trading. The market rates for gold are generally higher than the MCX gold price as local taxes and margin of profits are added to calculate the price for the physical market.

Note: Through the given formula, one can calculate the final price of their gold jewellery:

Final price of the jewellery = Price of the gold (22/18/14 Karat)* Weight in grams + Making charges + GST at 3% on the price of (Jewellery + making charges)

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After the roll out of GST (Goods & Services Tax) in July 2017, consumers will be charged at 3% of GST on the value of gold. In addition to GST, jewellery will invite a making charge of 5% and an import duty of 10%.This had affected the gold demand in Hyderabad initially, but is likely to benefit the organized trade.

To make delicate jewellery, two or more metals need to be combined through melting, and makers use a filler metal into the joint. It is the Cadmium which makers used to use as a filler with a ratio of 92 per cent gold and 8 per cent cadmium alloy and this is where the term KDM gold came from.

Although initially it didn’t affect the purity of the ornament, it caused serious health issues for artisans working with it and due to this; it is now banned by BIS. Now cadmium is replaced with advanced solder metal such as Zinc and other metals. Hallmark 916 gold is preferred gold to buy in Hyderabad. If you wish to buy gold jewellery then go for hallmarked gold of 22 carat gold in Hyderabad (or 24 KT), depending upon your price and preferences.

Gold can take on a different hue depending on the mixture of metals and their ratio added at the time of composition. Regardless of that, its purity is measured in the same way-higher the karat amount, higher will be the gold content in your gold jewellery. Below is the main difference between Yellow gold, white gold and rose gold.

Yellow Gold: While we often think of yellow gold as being pure gold but gold in its purest form (i.e. 24K) can be bought as a gold bar but is too soft to be used in Jewellery. Because of this, it is combined with metals such as Zinc and copper to create alloys. Yellow gold, particularly 22K, is typically softer than other alloys and can be easily scratched and dented. Therefore, 18K or 14K gold is used for jewellery as it endures the demands of everyday wear.

White Gold: It is also yellow gold that is mixed with other durable metals such as Zinc and silver. It is because of the presence of zinc and rhodium which actually gives white gold its color. Apart from that, rhodium also makes white gold more durable by covering the softer yellow gold with an additional protective layer. However, rhodium is expensive which makes the white gold jewellery more expensive when compared with yellow gold prices.

Rose Gold: It is a mix of pure gold and copper. Considering the durability factor, rose gold is the strongest of the three as copper is very sturdy. However, copper can cause allergic reactions to some people.

As per the Bureau of Indian Standards (BIS) Act, hallmarking agencies certifies gold and gold jewellery by evaluating it at official hallmarking centers. BIS Hallmark certifies that the yellow metal conforms to the national and international standard of fineness and purity. Gold is categorized on the basis of its purity namely 24 Karat, 23 Karat, 22 Karat, 18 Karat, 14 Karat. Following scale is used while defining the purity of the gold:

• 24K= 99.9% Pure
• 23K= 95.8% Pure
• 22K= 91.6% Pure (Also called as BIS 916 gold)
• 18K= 75%

Note: The weight in gold is measured in troy ounces, where 1 troy ounce is equal to 31.1034768 grams.

Many Indians add gold in their investment portfolio to meet their financial goals and to diversify risk. As compared to any other precious metal, gold has better hedging properties against inflation and deflation. In Hyderabad, people invest in gold in the form of:

Jewellery: When it comes to Southern India, Hyderabad is one of the biggest gold jewellery buyers.

Coin & Bullions: For the purpose of investment, people prefer coins and bullions which are available in various purity ranges and weight.

Commodity Exchanges: Gold can be traded as a commodity for varying tenures in exchanges like MCX (Multi Commodity Exchange of India), NSEL (National Spot Exchange Limited) or NCDEX (National Commodity & Derivatives Exchange).

For gold investment, one can either buy this physical metal in the form of gold jewellery, gold bullion coins, and gold bars or opt for e-gold investments, exchange traded funds, gold funds etc. Let’s have a look at the ways one can invest in gold:

Gold ETF: It is similar to stocks as an investor needs to have a demat account before s/he can invest and the funds trades on a stock exchange just like the shares of an individual company. Thus, the investor can buy and sell units of Gold ETF any time. The money will be invested in standard gold bullion of 99.5% purity. Gold ETF is a great investment option for investors in Hyderabad the cost of ETF is much lower if compared to jewellery, coins and bars.

Sovereign Gold Bonds: Issued by the RBI, these bonds are listed on the National Stock Exchange and Bombay Stock Exchange. These bonds can be bought from banks, stock exchanges, designated post offices, etc. They are denominated in multiples of 1 gm of gold and the maximum one can invest in is 4 Kg. The tenor of the bonds is 8 years with the exit option available after the 5th year.

Physical Gold: The government has launched the sale of BIS-hallmarked gold coins through Metals and Minerals Trading Corporation of India outlets and designated banks. MMTC also offers the option to buy back these coins or bars at the prevailing price thus offering the liquidity to the investors. The gold coin and bar will be of 24 karat purity (999 fineness) and will be hallmarked as per the BIS standards.

As it is with any other investment, there are certain things you should know before investing in gold:

• There is no lock-in period in gold investment except for sovereign gold bonds where it is 8 years
• The redemption amount in Sovereign gold bond depends on the market price of gold on the redemption date.
• Gold is a capital asset so it attracts capital gains tax when it is sold.
• You may invest in physical gold by purchasing gold jewellery but know that the same involves making charges which can’t be recovered at the time of selling

Digital gold is a relatively new concept in the market and simply put, it is a mode of investing in physical gold via online. Following is the comparison based on the common parameters between these two so that you can make an informed choice:

Investment size: Investors can buy and accumulate gold with as little as Rs.10 in case of digital gold whereas if you invest in physical gold, you will have to buy at least 1gm of gold. Due to the small investment size of digital gold, it encourages people to invest even if they have limited income.

Storage: Purchasing physical gold (in the form of bars or coins) has limitations with its storage, safety and maintenance. To ensure your gold is safe, you need to store it in a bank locker and bear long-term expenses such as registration cost, annual charges, service charges, etc. Digital gold gives you the freedom from storage issues and long-term expenses.

Liquidity: Gold is considered to be the most liquid asset if compared with other asset classes. However, to liquidate physical gold, you need to sell it to the dealer from whom you had bought along with the invoice or you won’t get the complete resale value. This is where digital gold helps you as it doesn’t require you to visit to the dealer and you can sell the accumulated gold anytime and anywhere via online.

Costing: When you purchase gold jewellery, buyers have to bear making and wastage charges over and above the actual gold cost. At the time of liquidating the jewellery, you are not given the making charges back. Whereas in case of digital gold, you trade only in 24K gold and since there are no making charges involved, you get the prevailing amount at the time of selling.

There are a wide range of factors which cause the gold prices in Hyderabad to fluctuate often such as current strength of the US dollar, a change in global business environment, seasonal demand and others. Some of the factors that affect gold prices in Hyderabad are given below:

• Performance of the US dollar highly influences the gold prices in Hyderabad. Since our country imports 900 tonnes of gold annually, a falling dollar will likely appreciate the price of gold in rupee termsand vice versa. If the rupee weakens against the dollar, the gold prices will increase which influences the demand of gold in the country.
• Global demand for gold is 1,000 tonnes more than its supply. With no new mining capacity coming through, most of the gold is being recycled. Thus, less of supply is another factor for changes in gold rates in Hyderabad.
• When inflation is on the upward trend, money in the form of gold could become a tool to hedge against financial and economic crises. This increases the demand for gold which ultimately increases gold prices in Hyderabad.
• Interest rates have a huge impact on the prices of gold because when RBI hikes interest rates, people start selling gold to invest in bank deposits and government bonds. This causes the demand for gold to fall which also causes the price to dip as well and vice versa.

• Gold usually does well during geopolitical turmoil. It is believed that crises such as military conflict, political upheaval in countries, which generally have a negative impact on other asset classes have a positive impact on gold prices as more people prefer gold to park funds. This in return increases the demand for gold.
• When inflation rises, the value of currency depreciates relative to gold. During those times, having money in the form of gold becomes a tool to hedge against inflationary conditions. This increases the gold prices.

If you are in urgent need of cash and have some gold, you can easily get a loan against gold jewelry. All you need to do is take that gold to the bank and keep it as collateral (Security). After evaluating the value of the gold through its purity and weight, they will disburse the amount to you. This loan which you can be repaid through monthly installments, after which your gold will be returned to you. Many private and nationalized banks offer gold loans at affordable interest rates.