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Summary: Gold rates differ across Indian cities because of local demand and supply, transportation costs, jewellers’ association pricing, purity standards and minor local charges. These factors cause small variations in daily rates, which also influence your gold loan value. Checking your city-wise gold rate helps you make better purchase and borrowing decisions. Manappuram Finance ensures accurate valuations by tracking these variations.
If you have ever wondered why gold rates are different in India, multiple factors influence the final gold rate in a city.
These can range from local demand and transportation costs to regional jewellers’ practices and more.
Let’s break down these factors and see how they play a role in the final gold rates offered by lenders across different cities.
Key Reasons Why Gold Prices Are Different in Different Cities in India
Local Demand and Supply
Cities with high cultural or festive demand, such as Chennai, Hyderabad and Kolkata, often see slightly higher gold rates. Weddings and festivals drive larger purchases, which increases demand locally. Conversely, smaller cities with limited supply chains may experience slightly elevated prices due to scarcity or slower restocking.
Import and Transportation Costs
Most of the gold in India is imported. Cities located closer to ports, like Chennai, Kochi and Mumbai, generally incur lower transportation costs. In contrast, inland cities such as Delhi or Lucknow may see higher rates due to added logistics and insurance charges. These costs are included in the final gold price.
Local Jewellers’ Association Pricing
Every city has its own jewellers’ association that decides the daily gold rate. While these associations follow the international and national price benchmarks, they often add their own margins, which creates slight differences in rates across cities.
Taxes and Local Levies
While GST on gold is uniform at 3% nationwide, some states or cities might add extra local charges, which can make the final price a little different.
Hallmarking and Purity Standards
Cities with higher demand for BIS-hallmarked or certified gold may see marginally higher prices, as jewellers include the cost of certification and assurance of purity in their rates.
How Much Can Gold Prices Vary Between Cities?
In India, gold rates aren’t uniform; they change a little from one city to another. While the differences are minor, they still impact the final decision for buyers and investors.
When, on one hand, the base price of gold is largely influenced by international markets and the Indian Bullion and Jewellers Association (IBJA), the final price you pay often differs from city to city. This is because local taxes, transportation costs, making charges and demand-supply dynamics all play a role.
Typically, the price difference stays under ₹100 per gram, depending on local demand, supply and market conditions. For example, on the same day, 22k gold in Chennai might be priced at ₹9,970 per gram, while in Delhi it could be ₹9,950 per gram.
Cities in South India sometimes experience slightly larger differences due to higher cultural and festive demand, especially during wedding seasons. While the base international gold price remains the same nationwide, these local adjustments create small but important variations.
How Do City-Wise Gold Prices Affect Your Gold Loan Value?
Your gold loan eligibility is closely tied to the current market rate of gold in your city. Banks and NBFCs generally follow the daily rates set by local jewellers’ or bullion associations to calculate the loan-to-value (LTV) ratio.
This means that if gold prices are slightly higher in one city compared to another, the amount you can borrow per gram may also be higher. Even small differences in city-specific rates can add up, significantly impacting the total loan value.
For borrowers, staying informed about these variations is crucial. Before applying for a gold loan, it’s wise to check the live rates in your city and compare different lenders.
With this, you will be able to get the best possible loan value while using your pre-owned assets as collateral. Understanding these variations also helps you plan your finances more efficiently.
At Manappuram Finance, we closely track these city-wise variations, ensuring that our customers always receive accurate valuations when applying for a gold loan.
Final Thoughts
Gold rates aren’t the same everywhere, and thus, knowing why gold prices are different in India is key for buyers and borrowers.
These rates vary across Indian cities due to factors such as local demand, transportation costs, jewellers’ association rates and minor taxes.
While these differences may seem small, they can affect jewellery purchases and gold loan values.
At Manappuram Finance, we offer an easy-to-use online gold loan calculator that can help you check the potential loan amount and interest rates based on your current gold market rate.