Gold prices have risen steadily over the past year in Bangalore, the state capital of Karnataka. Various factors have influenced this price rise, the least of which is the surge in wedding ceremonies post-lockdown.
Besides, gold has become a safe haven among investors in Bangalore amid both nationally and globally tumultuous stock and bond markets. Today’s gold rate in Bangalore stands at INR 60,000 approx. for 24k gold and INR 55,000 approx. for 22k gold as of 28th March 2023.
The Current Scenario of Gold Investments in Bangalore
An Axis My India study recently revealed that nearly 65% of the Indian population invests in gold, of which 66% of the population belongs to tier-I cities like Bangalore. While adornments remain a key reason for the demand for gold among Bangalore and other metro populations, the report highlights that nearly 36% of the tier-I population buy gold as an investment.
Today Gold Rate in Bangalore
The following table presents the gold rate for 24K gold and 22k gold in Bangalore over the past 10 days.
|Date||Pure (24k) 1 gm||Pure (24k) 10 gm||Pure (22k) 1 gm||Pure (22k) 10 gm||Change in percentage|
Different Ways to Invest in Gold
Other than physical gold, investors can choose to invest in gold in the following ways:
Gold ETFs are traded on the exchange like stocks. However, unlike other ETFs, the underlying instrument is primarily 99.5% pure gold, and the rest are debt instruments. Hence, gold ETFs are a good reflection of today’s gold rate in Bangalore and India.
Gold Mutual Funds
These mutual fund schemes invest predominantly in gold ETFs. Also known as gold savings funds, they invest 90-100% of the corpus in gold ETFs and the remainder in short-term debt or money market instruments.
Sovereign Gold Bonds
The RBI issues SGBs on behalf of the Indian government. This government security is priced according to the per-gram gold price in India. They come with an 8-year maturity and 5-year lock-in period, but SGBs can be sold anytime within the lock-in period on stock exchanges.
Buying digital gold is the same as buying physical gold, with the option to purchase the desired amount online. The seller stores the purchased gold in a secured vault, and the buyers can redeem their digital holdings for physical gold anytime.
Factors Affecting Prices of Gold in Bangalore
Five primary factors that influence gold prices in India in general and Bangalore in specific are as follows:
Most of the gold in circulation in India is imported. Hence, global trends have a significant bearing on today’s gold rate in Bangalore and India. These trends include geopolitical situations in international gold markets, such as uncertainty and tensions affecting the supply chain of gold.
Further, the gold spot price, determined in the London bullion market, also sways gold rates in India, implying that if the spot price declines, gold rates dip and vice versa.
Inflation is a market situation when prices of goods and services in an economy rise. Gold price in Bangalore and India broadly is directly proportional to the inflation rate. If inflation is high, gold prices will also surge, and vice versa. That’s because gold is often used as a hedge against the falling value of a currency in an inflationary economy.
Demand And Supply
As with any commodity in an economy, gold’s value is also subject to the laws of demand and supply. Today’s gold price in Bangalore will increase when there’s an increase in demand. This demand and subsequent rise in value can be seen during the wedding season as well as after a good monsoon. The latter is because it improves the earnings of rural populations, and rural India reportedly consumes up to 60% of gold in India.
The Reserve Bank of India manages the supply side, which holds both gold and currency reserves. If the RBI buys less gold than it sells, gold prices reduce, while prices increase when it buys more gold than it sells. The fluctuation occurs because of an imbalance in the supply of gold and cash flow in the market.
Central bank interest rates play a significant role in gold rates today in Karnataka and India. Interest rates are one of the key instruments that the RBI uses to rein in inflation. When interest rates rise, investors prefer bonds and other interest-based investment options over gold.
Further, a rise in interest rates reduces cash flow in the economy, leading to a decline in gold demand. Conversely, when interest rates dip, preference for fixed-income instruments drops in favour of gold. Reduction in rates also boosts cash flow in an economy, improving demand for gold.
Value of INR
Since India’s gold supply is predominantly import-based, as discussed earlier, the Indian Rupee’s value significantly weighs on the domestic gold rate. Gold is usually priced against the US dollar, British Pound Sterling, and Euro. Hence, the Rupee’s value against these currencies determines gold rates.
Quality of Gold
Lastly, the quality or purity of gold, i.e., 24k, 22k, 18k, 14k, determines the price. Twenty-four carats, which is 100% pure, is the priciest option, and the rate declines gradually per purity. Hence, the gold price today in Bangalore for 22 carat will be less than 24k gold but higher than 18k gold.
Taxation on Today’s Gold Rate in Bangalore
Buying and selling gold are subject to various taxes in India. Taxation in both cases has been illustrated below.
1. On Purchase
The Indian government imposes a 10% customs duty, reduced from 12.5%, on gold imports. Additionally, the GOI adds an Agriculture Infrastructure Development Cess (AIDC) of 5% on gold imports.
Over and above the import duty and AIDC, a 3% GST is added. The total tax on gold adds up to 18% of the original cost of import, with a significant effect on the gold rate today in Bangalore. Further, if you buy physical gold worth INR 1 lakh or above, 1% TDS is levied.
2. On Sale
Gold attracts short-term capital gains tax if sold within three years of purchase. In that case, the sale amount is added to the seller’s annual tax liability and taxed accordingly.
Gold attracts long-term capital gains tax (LTCG) when sold after three years of purchase. A 20% LTCG tax with an indexation benefit is levied on the sale of gold in that case.
Alternatives to Gold Investment
While gold is a time-tested investment choice during periods of stock market uncertainty and global tensions, it’s not always profitable. In such cases, certain alternatives can be considered.
- Equity stocks: These are stocks of companies traded on exchanges like NSE and BSE. You will need a Demat account to invest in stocks.
- Bonds: Bonds are debt instruments issued by both companies and the government. These are less risky and tend to offer lower returns compared to stocks.
- Debt mutual funds: These mutual fund schemes primarily invest in debt instruments like bonds.
- Equity mutual funds: These mutual fund schemes predominantly invest in equity stocks. They tend to offer higher returns than debt-based investments but lower than stocks.
Besides these, one can also consider investing in real estate and precious metals like cobalt, platinum, and silver.
Gold has long been a preferred investment choice among investors worldwide. In India, Bangalore stands out as a bustling market for gold due to its burgeoning urban population and rising living standards. In recent months, gold price in Bangalore has surged due to various factors. Investors should carefully consider these factors, including demand and international trends, which affect today’s gold rate in Bangalore, before investing.
Frequently Asked Questions
Q. What is the gold rate today?
The 24k gold rate presently is approximately INR 60,000 as of 28 March, 2023.
Q. How to check gold purity in Bangalore?
Check the BIS hallmark embossed on every piece of gold. It consists of three marks, the BIS standard mark, the purity grade, and a unique 6-digit alphanumeric code.
Q. Why is 24k gold more expensive than 22k gold?
Carats refer to the purity of gold. 24k is the purest form, with 99.5% purity. 22k gold refers to 91.6% purity. Hence, the gold price today in Bangalore for 22 carats is less than 24k gold rates.
Q. How to invest in gold ETFs?
You can invest in gold ETFs through the NSE or BSE website via a broker. You will need a Demat account and a trading account to begin investing.
Q. Do fixed deposit rates affect gold rates in Bangalore?
FD rates are inversely proportional to gold rates. When FD rates rise, demand vis-à-vis the price of gold decreases and vice versa.