Suryaa Business Desk: International bullion markets have seen gold prices fall by approximately 24 percent from their all-time highs. In contrast, the decline in the Indian domestic market has been limited to about 20 percent. This 4 percent discrepancy has become a subject of discussion among consumers and investors. Market analysts attribute this difference primarily to the exchange rate of the rupee, taxes, and local demand.
The depreciation of the Indian rupee against the US dollar is a primary factor. Gold transactions in the international market are conducted in dollars. While global gold prices have fallen, the weakening of the rupee makes imported gold more expensive for India. This currency depreciation offsets some of the impact of the international price decline, preventing domestic gold prices from falling as rapidly as they have in dollar terms.
Import duties and the local tax structure also play a significant role. India relies on imports for over 90 percent of its annual gold requirements. The retail price in India is influenced by customs duties imposed by the central government, agricultural infrastructure development cess, and a 3 percent GST.
Additionally, the ongoing Diwali festival and wedding season have created high demand for physical gold. The premium charges paid by local jewelers and retailers also contribute to keeping prices stable rather than allowing them to drop significantly. Experts suggest that the full impact of the global decline may not be reflected in the domestic market until the rupee stabilizes.