Why does the price of gold change every day? Who decides what the new price of gold will be?

Recently, the Reserve Bank of India (RBI) has completely denied the news of selling its gold. Whereas in media reports it was being claimed that RBI has sold gold worth about 12 billion dollars i.e. about ₹ 1 lakh crore to keep the rupee stable. Refuting these rumours, the Reserve Bank of India has clarified that the claim of selling gold is completely false. India’s total physical gold stock is safe and unchangeable at about 880.52 tonnes. Government agency PIB Fact Check has also completely rejected such misleading claims. But amidst these rumours, a debate has erupted on social media on the buying and selling of gold and its daily changing prices. People want to know why gold prices change daily in India. And who decides what will be the price of gold in the country the next day? Who has the right to determine this in the country?

Who decides the price of gold?

Most people think that the price of gold is determined by the government, but this is a completely wrong concept. Neither the government nor any specific person decides what the price of gold will be in India the next day. There is no interference from any company in this. New gold prices in India are released daily by ‘India Bullion and Jewelers Association’ (IBJA).

How is the price of gold determined?

‘India Bullion and Jewelers Association’ (IBJA) consists of a team of India’s largest and leading bullion traders, gold importing banks and government agencies. To determine the price of gold, this organization, as a daily routine work, discusses with big gold dealers sitting in different parts of the country. Apart from this, the movement of gold prices in the international market is also monitored and new rates of gold are released by the evening.

Why do gold prices change?

Often the question comes in people’s mind that why do gold prices change daily? Why not in a month, 3 months, 6 months or a year? The most important reason behind this is that gold is an international commodity. This is not a permanent thing. It is mined from mines. Gold reaches you after many processes like refining, import-export, making etc. In such a situation, sometimes the output of gold is average and sometimes less. Therefore changing the price of gold is a necessary and natural process.

Who decides the gold rates in the world?

Like IBJA decides the price of gold in India. Similarly, the right to determine the price of gold at the world level rests with the London Bullion Market Association (LBMA), which monitors the fluctuations in the buying and selling of gold in the markets of different countries. According to different time zones, gold business continues 24 hours in the world, hence the global prices of gold also keep changing.

Why does gold become expensive in India?

For your information, let us tell you that India imports about 85-90 percent of gold for its requirement. This entire purchase is done in US dollars. Now the value of Indian Rupee keeps increasing and decreasing compared to the US Dollar. Therefore, gold prices also fluctuate. Now the question is why gold becomes expensive, then let us tell you that if the rupee becomes weak then the dollar will become strong and if the dollar becomes strong then the country will have to buy gold at expensive rates.

However, what will be the price also depends on the demand and supply of gold. In many cases, the country’s economic policies and government taxes like import duty and Goods and Services Tax (GST) are also responsible for changes in gold prices.

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