Gold prices are different in multiple cities like Chennai, Bangalore, and Kolkata & Delhi etc. Well, there occurs a few of the major reasons why there occurs a price change strategy. The reasons behind the gold price change can be Transportation cost, Volume play, Gold Associations & the Purchase Price etc. Ideally, the gold rate depends upon the international price fluctuation. Similarly, the gold rates should be the same everywhere however that doesn’t exactly happen since there are certain variables added to the equation.
Basically, Gold prices are different in every city & even every country. There occurs an involvement of a few of the reasons that why there occurs price change.
There is a reason behind the price change due to the following reasons:
1. Hauling Costs
As you know that like every product available in the market, may it be essential items, consumer durables or expensive metals like gold, silver etc the transportation cost gets added to the sales price & similarly the cost of safeguarding gets added to gold so it is ultimately a charge at the hands of the customer.
2. Includes Gold Bullion Associations:
Since there is an association for every segment in our country, the jewelers have got their own association. The association regulates the price structure of the gold for a particular day on daily basis. These prices get fixed on an alternate day basis. It is generally based upon the End of Day (EOD) Price during the previous day & the international gold market that stands out at a particular time as & when it gets calculated with the other incurred cost that makes the gold into a marketable item that in return leads it to the variation of prices in different countries.
3. Government stands on Import Duty
Our government aims to play the most important role in this segment & one may think that what exactly the government’s role in the bullion trade can be. Basically, the government not only fixes the tax rates but also poses the rate of import duty & as India essentially does not mine Gold however imports it through other countries the rate of import duty also affects fixing of gold price for the retail segment. The import duty depends upon the deficit or surplus of currency pooling, so if there occurs deficit then there would be a rise in the import duty & vice-versa.
4. The real worth of USD
The position of USD against any currency during a particular period also plays a vital role in the pricing of the gold. If the value of USD falls into the international markets then there would be a significant rise in the price of gold rate & when the value of rupee rises up the gold rate would decrease. However, since recent years, the price of gold has been fluctuating either it turns out to be too high or there occurs a steady decrease in the price, so that the status of the gold market comes out to be in balance.
Relationship between Gold & US Dollar:
There occur approximately 325 million people in the United States, however the total world population comes out to be 7.4 billion. Basically, less than 5% of the world lives in a nation where the U.S.Dollar is the national currency. Gold as a currency plays a ubiquitous role across the globe. 95% of the world must work upon translating the value of the metal to their local exchange rates.
Not only during history but today also, Gold is money. The value of U.S.Dollar & that of gold is important. Interest rates also affect the price of the prized metal. Basically, when the interest rates move higher, the price of gold ultimately falls, since it costs more to carry the metal. In this manner, the assets will demand more just because of their interest rate component.
This also occurs as a psychological factor that is attached to the value of gold. The price of gold comes out to be sensitive to the overall perceived value of fiat or paper currencies. The price of historic metal tends to rise as faith in government falls. The price of gold tends to fall when the time is calm. So, the world’s oldest & most storied currency, Gold is countable as an important barometer in terms of global economic & political well-being.