The surge in gold loans to public sector banks (PSBs) seems to be an indication that Indians have gone for gold loan for their funding needs. As per the Reserve Bank of India (RBI), total gold loan portfolio of PSBs has increased 59.1% to Rs. 63,770 crore as of September 2021, from Rs. 40,086 crore during the same period last year.
Gold loans have a per gram rate that makes financing your jewelry purchasing easier. Learn more about this option to make sure you’re safe and secure when choosing your next piece of jewelry.
What is Per Gram Rate for Gold Loan?
Taking gold as a form of collateral on a gold loan is an ideal option for many investors. This form of credit instrument is great when you need to borrow money against your precious metals, like gold and silver bullion.
Alongside purity, weight, and average price, the per gram rate of gold also depends on a few other factors. These include demand, taxes and transportation costs. For instance, the per gram rate of 22-carat gold on 5th January 2022 in Maharashtra was Rs. 4973 per gram whereas in Punjab it was Rs. 4921 per gram
If you are looking to take out a gold loan in Maharashtra, then you can expect to get less compared to that of Punjab.
As there are many factors involved in gold trading, I will explain them to you. The first factor is the global price of gold that is determined by a group of traders. They decide on this price every day and apply it to buy or sell gold within India and its different regions. Another important factor is the daily per gram rate which may differ between various cities and regions within the country.
Now that you understand the gold loan per gram rate, you should learn about the factors that play an active role in determining the gold price in India. Here are some of the important factors that impact gold prices and decide their value on a daily basis:
What are the Factors Affecting Gold Price in India?
The factors impacting gold price in India are as follows:
- Inflation
- Demand and supply
- Jewelry market of a country
- Government gold reserves
- Interest rates
- Global trends
- Import duty
- Equation of Rupee and Dollar
Read on to know about a few factors in detail.
1. Inflation:
Gold is a precious metal that is widely used to purchase products, services and goods. One of the notable features of gold is that it retains its value irrespective of the economic scenario. This is the reason why gold is considered an inflation hedge.
If a country’s currency is at risk of losing its value to inflation, people will seek alternatives to their investment portfolio. A great example for this is gold. Since gold has a more stable base and does not have any fluctuating prices as compared to other stocks that are also risky investments, thus it is usually regarded as a better investment than an investment in natural resources like oil or gas.
2. Demand and supply:
The value of gold does not keep changing since its presence in the market is available for a long duration. Unlike other products, it doesn’t get consumed every year like the phones and cars. The annual production of gold from mines across the world is very low. Therefore, it has remained as a commodity for much longer than other products in the open market.
Gold is the most widely traded and historically most expensive precious metal. Despite its high value, gold does not circulate at a constant rate of exchange relative to other commodities. In fact, its price swings wildly, dependent on supply and demand as well as worldwide economic conditions such as interest rates and current currency fluctuations.
3. Jewelry market of a country
When it comes to the jewelry market in India and many other countries, one must understand that they are controlled by the same laws of supply and demand. If there is a spike in demand for gold, it is directly related to the increase in income level. The growth in this sector will directly influence the gold price of the country.
