There is a vast majority who feels that gold is a universal asset and its price varies very less. They are under the impression that within the inter-state also, the prices remain the same. Ideally, the gold rate is decided by the international markets and it should be evident that prices should be the same across the country.
However, this unlikely the case. The metal gold is of immense importance in Indian Culture. Buyers and sellers alike, wish the price to be constant throughout the country so that the business flow remains easy.
Logically the price varies due to certain reasons
Gold is one of the most valuable items in market economics. It is evident that it is handled by care and, there certain factors such as security, transportation of gold and interstate taxation which are kept in mind. These factors are eventually charged to customers.
Generally, the sellers usually offer discounts on the major amounts of gold purchase.
The vendor may incur a discounted price, it might be less than what market offers to other buyers, this leads to a reduction of prices in the retail segment.
There is a position in which the government takes regarding the pricing of gold. Since India doesn’t mine its gold, the majority of it is imported. Therefore, there is a proper fixation of import duty.
It depends on the deficit and or the surplus of currency pooling. If gold is in deficit the import duty will increase and the prices will increase and vice versa.
Like there many organizations for every product segment, gold is also a product. There are many associations of jewellers which regulate the price structure of gold. The same is fixed two times, it is based on the end of the day and the international rates. This may further vary with the making costs incurred, which is different for different vendors. This makes gold more marketable and more profitable, that’s why the increased cost.
How strong the rupee stands as compared to the dollar also plays a pivotal role in the standard of pricing of gold.
If the value of rupee falls in the international market, the pricing of gold increases in the Indian Market. If the pricing of rupee remains steady the gold prices are shielded from the market fluctuations.
Conclusively, the price of gold will always be dependent on market economies. There can be certain times when it will be steady but in the shorter run, the price of gold will never be balanced. Since it involves factors as discussed above. However, the gold is there to stay and be an entity for the longer run.