Explained: Why Gold has become cheaper in India than in Gulf and Singapore

Gold prices in India have become cheaper than in some traditional gold-buying destinations, like the United Arab Emirates, Qatar, Oman, and Singapore. 

In Short

• Gold prices in India are now cheaper than in Gulf and Singapore
• 24K gold in India is Rs 75,650 per 10 grams as of 16 November
• Global trends and U.S. economic data influence gold prices

Imagine planning a wedding or shopping for the festive season and discovering that gold prices in India are now cheaper than in the Gulf or even Singapore. Sounds surprising, doesn’t it? The tables have turned for the shiny, often termed 'safe haven' metal, leaving jewellery enthusiasts and investors wondering why the traditional gold-buying hubs are suddenly more expensive.

Gold prices in India have become cheaper than in some traditional gold-buying destinations, like the United Arab Emirates, Qatar, Oman, and Singapore.

GOLD PRICES IN INDIA AND ABROAD

The price of 24K gold in India as of November 16 was Rs 75,650 per 10 grams, a drop of Rs 110 from the previous day. The 22K variety stands at Rs 69,350 per 10 grams, while 18K gold is priced at Rs 56,740. Meanwhile, in Oman, 24K gold is priced at Rs 75,763 per 10 grams, up by Rs 220, and in Qatar, it has climbed to Rs 76,293 per 10 grams.

This contrast between falling gold prices in India and rising rates in Gulf nations and Singapore highlights regional differences influenced by several key factors.

WHY ARE PRICES FALLING IN INDIA?

1. Global Gold Trends:
   Globally, gold has seen its sharpest weekly fall in over three years. Spot prices have dropped by 4.5% in the U.S., trading near a two-month low at approximately $2,563.25 per troy ounce. This downturn is driven by strong economic data from the U.S., leading to expectations of prolonged high Treasury yields and a stronger dollar. A robust dollar makes dollar-priced commodities like gold more expensive for international buyers, pressuring global demand.
2. Demand and Premiums in India:
   In India, demand for physical gold is rising, as indicated by the premium on gold climbing to $16 per ounce this week, up from $3 last week. This signals strong retail buying interest, possibly due to the ongoing wedding season and festive purchases. Despite the rising demand, gold prices have retreated from their September highs, making the precious metal more accessible to Indian consumers.
3. Global Economic Indicators:
   Economic resilience in the U.S. has reduced the likelihood of rate cuts by the Federal Reserve, keeping interest rates high. High rates dampen the appeal of non-yielding assets like gold. This has contributed to a global decline in gold prices, which is now reflected in India’s local market.

WHY ARE PRICES HIGHER IN THE GULF AND SINGAPORE?

1. Geopolitical Tensions:
   Escalating tensions in the Middle East, particularly in Israel and Gaza, have increased gold's appeal as a safe-haven asset. This has pushed up prices in the Gulf nations, where demand for gold often spikes during periods of uncertainty.
2. Regional Demand Dynamics:
   In countries like Qatar and Oman, gold prices have risen due to heightened retail and institutional demand. The region’s traditional preference for gold as a safe investment during volatile times further supports higher prices.
3. Currency and Import Costs:
   Exchange rate differences and higher import costs for gold in these regions also play a role. Local market conditions, taxes, and logistics can impact gold pricing, leading to the observed disparity.

THE GLOBAL GOLD OUTLOOK

Gold prices worldwide have experienced a sharp decline since reaching record highs in October, falling by 7% in the last month. Despite this, gold remains up by over 24% year-to-date, buoyed by central bank purchases and ongoing geopolitical risks.

Traders are now focused on the Federal Reserve's December meeting, which could provide clarity on future monetary policy. Any signs of economic slowdown or easing rates could support gold prices globally, potentially reversing the current bearish trend.