Do you know how gold prices for your jewellery are decided? Who sets them? Which factors impact them? Get your answers here
What is the current rate of gold? Customers ask this question whenever they visit a jewellery shop. But have you ever wondered how these prices are decided? Who determines them and what are the factors affecting the price of gold? Here's what you need to know.
How Gold Price Decided: When you buy gold jewellery, you're always interested in the current gold price. Even at the jewellery store, you probably ask about the price first. This is because the prices of gold fluctuate daily. But have you ever wondered how these prices are determined and who decides them? Here's what you need to know.
How gold prices are determined?
The price at which you purchase gold from jewellers is known as the spot rate. This rate is based on the Multi Commodity Exchange (MCX).
How prices are set on the MCX?
On the MCX futures market, the price of gold is determined by analysing data on the supply and demand of gold in the Indian markets, as well as global inflation trends.
MCX coordinates with LBMA
Additionally, the MCX coordinates with the London-based Bullion Market Association to establish gold prices.
VAT, levies, other costs also adjusted
After these factors are considered, the prices are set. The prices on the MCX are then adjusted to include VAT, levies, and other costs.
Factors affecting gold prices
Gold prices are influenced by both domestic and global economic and political factors.
Factors affecting gold prices: Example
For instance, if the Indian government introduces new regulations on gold imports, it can impact gold prices. Similarly, a decrease in gold production in a major exporting country can also affect prices.
How spot prices are determined?
The spot price—what you pay when buying gold from jewellers—is set by members of the bullion association in various cities at the market opening.
Slight variations in prices
Since each city has its own bullion traders, there can be slight variations in prices.
Prices vary on carat
Additionally, gold prices vary based on the carat.
How gold prices are set internationally?
Globally, gold prices are determined by the London bullion market, which is the largest in the world.
Early London Gold Fix set prices
Before 2015, the London Gold Fix was responsible for setting gold prices.
London Bullion Market Association
Since March 20, 2015, this role has been taken over by the London Bullion Market Association (LBMA), administered by ICE Administrative Benchmark.
LBMA collaborates with national organizations
The LBMA collaborates with national organizations and governments to establish gold prices.