The gold prices in India are determined according to the international market in the following way:
- The price of gold in USD is taken as a base price. Depending on the value of indian rupee as compared to USD (eg- 1 USD= ₹63), the price of gold is converted into rupees.
- The import duties on gold are added to obtain the final price of gold.
- Gold is a global commodity. In the international market, the price of gold is determined by the forces of demand and supply. Higher demand leads to higher price and vice versa. Higher supply leads to lower price and vice versa.