Have you ever thought that how does the price of gold & silver being determined and on what ground the price of gold is determined? And who decides the gold price in India? And how many times in a day does the price of gold fluctuates?
These are some important questions whose answers you must have if you are a jeweler, miner, seller or dealer of these precious metals such as gold, silver, Kundan & Jadau. Even being a buyer of these precious metals, you must have a basic understanding of all these things.
So, first of all, let’s start with the ultimate guide on price of gold & silver?
How the price of gold determined?
- Gold is a global commodity. In the international market, the price of gold is principally dependent upon demand and supply. Let’s say if the demand for gold is high, so does the price of gold will be high and vice versa.
- In the international market, the price of gold is determined on a daily basis based upon the demand & supply of gold & silver metal.
- The fixation of gold & silver price is being done by a committee comprising of five-panel members who belong to different companies dealing with the respective gold markets, finance, and trading.
- While determining the price of gold these members take into consideration all the vital factors that may altogether impact the price of gold.
The reason for being gold an expensive commodity is because of the following reasons:
The gold & silver both are precious metals that are being mined using highly expensive machines that raise the bar of its being costliest metals.
Another reason that increases in its overall cost is the recycling process of scrap that is obtained from the mining process. All these factors are taken into due considerations while determining the price of gold.
How Many Times in Day the Price of Gold Changes?
Every day the price of gold is being fixed twice and the timing to set the price of gold is 10:30 in the morning and 3:00 in the afternoon. Both the schedules are based on GMT and the rates are fixed by the 5-member panel comprising of Banks like the Deutsche Bank, HSBC, banks under the investment banking sector like Barclays Capital and Societe Generale, which is the division of the French multinational company offering financial and banking services.
What are the factors which affect the price of gold in the Indian Market?
The following reasons influence the price of gold in India:
The Value of the Rupee: As we know that India imports gold. So, if the price of gold raises from 65 to 66 then the Indians have to pay more to buy gold in the Indian market, and the price of gold will also increase in the domestic market.
However, if the Indian rupee gains against the dollar, so the price of gold falls in the domestic market. But it happens only on one condition if the price of gold in the international market stays steady.
The import duty on gold also plays a vital role in deciding the price of gold in the Indian market. Recently, the government raised the import duty on the gold to confine the gold import which has further increased the price of gold and made gold more expensive in India.
The Role of RBI:
The Role of RBI (Reserve Bank of India) also impacts the price of gold in the Indian market because RBI has invested hugely in gold. So, if RBI on large scale selling by central banks declines the price of gold; on the other hand, large-scale buying by these central banks raises the price of gold in the domestic market.
The Role of Economy:
The economy of the world also plays a vital role in fluctuating the price of gold. For instance, if the economic recession comes people invest in gold for better future planning so the price of gold increases due to low supply and high demand.
On the other hand, if there is a boom in the economy, people sell gold, so supply increases and demand decreases, so the price of this commodity falls.
Who decides the price of gold in India?
The Indian Bullion Jewellers Association (IBJA), based in Mumbai, fixes a rupee price for the gold that is determined on the member dealer quotes
Along with all the above-mentioned factors, the IBJA also contributes to determining the rate of gold in the domestic market.