Gold Rate and India

The current gold price in India is still quite attractive and now that it is past mid-October, the demand of gold in the country is expect to rise once again. The reason behind this is that the season of festivals and weddings begins soon after Shraadh and gold jewellery happens to be an integral part of these Indian events and occasions.

Over the past month or so, the current gold price in India has been trading at a discount, while premiums in China have been low too since before the country’s National Day holiday. While Asia has always been among the leading consumers of gold, there has been a decline in demand in recent times. India happens to contribute nearly half of the demand of gold in the world. Moreover, there has been a looming rise in the US interest rate, consequently putting gold prices under even more pressure.

The month of October had also marked the beginning of Shraadh in India, a period that lasts for two weeks during which Indians consider it unfavourable to make big purchases, gold and/or property. Hence, the retail demand of gold in India also gradually diminished during this period. Farmers in India also witnessed their income crumble down as a result of the recent weak monsoon, which further caused the demand of gold to decline. Rural areas in India contribute 2/3rd of gold demand in India, since people in these areas frequently invest their wealth in gold.Prices of gold in India were and still are attractive, and even though Shraadh period has passed, the retail demand of gold is still moderate. Since the past week or so, gold dealers and retailers in India have been offering discounts between $6 and $8 per ounce of gold when compared to the global benchmark. The duty advantage that they receive on dore has encouraged and prompted local refiners to make aggressive sales. Gold refiners receive approximately 8% import duty on dore, which is approximately over 2% lower than the import duty on refined gold, so they are able to offer attractive discounts.

At the moment, bank safes, jewellery boxes and Hindu temple vaults in India are home to almost 20,000 tonnes of gold that lies there idle. At current prices and based on the purity levels, the approximate value of this 20,000 tonnes of gold is almost $700 billion. The government of India intends to take advantage of that 20,000 tonne trove of gold for the benefit of the country’s economy through a Gold Monetization Scheme that will be launched in November. The schedule will encourage Indians to lend the gold they possess to banks.Based on the scheme of gold monetization, households and temple trusts will earn tax-free interest by depositing their gold with banks and the gold will then be lent to jewellers, keeping gold into circulation. As mentioned above, people in rural areas of India own large amounts of gold, but the gold lies idle and is rarely regarded as an investment. These people will be able to earn a decent amount of return from the scheme. So, for this reason, it is extremely important that they know the current gold price in India.

If you are interested to know what is the current rate of gold in India, the author of this article recommends GoldRate.asia.