India is the world's 2nd biggest consumer of gold after China. The major demand for gold is driven from the jewellery sector. As per the data available, the import for gold registered at USD 34.62 billion in 2021-22 financial year. The import of gold in volume has been registered at 842.28 tonnes in 2021-22.
It is important to note that India does not mine gold and the place name Kolar in Karnataka which used to mine gold earlier has been shut down now. Therefore, India imports almost all of its gold to meet the requirement.
How Gold price is determined?
We use imported gold prices to determine the 22 carats gold price in India.
Who imports Gold?
There are many importers of gold in India. A large number of these importers are some of the renowned government owned banks, leading private sector banks, and several private companies. There is a rise in the number of private companies importing gold to India in the last few years. Below is the list of some of the leading importers of gold in India and they play a key role in determining the gold price in India for the wholesale gold rates in India:
State Bank of India
Bank of Baroda
Union Bank of India
Bank of India
Punjab National Bank
Minerals and Metal Trading Corporation of India
Major Factors That Determine Gold Price In India
The price of gold depends on demand and supply formula. It is worth noting that gold is not an easily available commodity as it is quite scarce and not many countries have great gold reserves. Therefore, the prices of gold mainly depend on the demand and supply factors especially in Indian context. India largely imports most of its gold so whenever the import prices surge, the same can be seen in the gold price in India.
The prices of gold are inversely proportional to Dollar prices. The gold rates are decided on the basis of Dollar's performance. As gold is a globally traded commodity and Dollar is the largely preferred global currency, the relationship between gold and US Dollar holds great relevance.
Gold prices can get impacted by global or geopolitical relations among countries. It is noticed that gold prices surges when tensions rise between leading global economies.
After gold is imported, the other components of import duties, VAT etc. are added and gold is then sold to some of the wholesalers who then retail the same to the retailers in the country.