Gold Rate Today in Kozhikode

Kozhikode, historically known as Calicut, is located in the state of Kerela. It is the 19th largest city in India and the second largest metropolitan area in Kerala state. It is often referred to as the "City of Spices" owing to its significance as a major spice trading port near Kappad Beach, where Portuguese explorer Vasco da Gama set foot in 1498.

Gold and its products play an essential part in the customs and daily lives of the natives of this beautiful city. In Kozhikode city, gold is mainly used for jewellery-making and investment purposes. For Indians at large, gold jewellery is a sign of social status, and so is for the people of Kozhikode.

This city has been known for its gold trade legacy since the 20th century. There are numerous gold jewellers in Kozhikode. The well-known gold jewellery brand Malabar Gold & Diamond established its headquarters in Kozhikode, which was founded in 1993. In most cases, gold is used in the form of jewellery, ornaments, coins, gold bars, etc. Local jewellers are the backbone of the gold market in Kozhikode.

Gold prices in Kozhikode are linked to various regional, national and international factors. Continue reading to learn more about gold prices in Kozhikode and how it is affected.

Factors Affecting Gold Price in Kozhikode

Gold is one of the significant monetary assets in the world. In Kozhikode as well, it is a symbol of wealth and social status. There are various factors affecting the gold price in this city. 

Here are some essential factors affecting gold prices in Kozhikode:

Impact of central bank interest and GST

The central bank's decision can affect the price of gold in Kozhikode. The Reserve Bank of India has started hiking interest rates to fight against higher inflation. Gold and interest rates have an adverse correlation with each other. 

Currently, the gold market is facing an increase in price due to the tax burden. So the overall cost of gold has gone up. As a result, 3% GST on gold, 5% on making charges, and an additional 12.5% import duty is levied on the purchase of jewellery. All these explain the rise in the gold price in Kozhikode.

Inflation

When inflation increases, the currency value decreases. So, people tend to invest in gold in Kozhikode and elsewhere in the nation. Between gold and inflation, there is a direct relationship, which means that whenever inflation rises, the value of the Indian Rupee goes down, which leads to a rise in the price of gold.

When inflation increases, the demand for yellow metal also increases. This is the reason why people prefer to invest in gold rather than the rupee.

Geopolitical factors

Geopolitical factors also affect the gold price's fluctuation. When there is a crisis due to geopolitical factors, it impacts gold prices positively. This is because gold is a safer asset than any other asset.

Kozhikode imports a significant portion of its gold requirement. The geopolitical developments make imports and exports easier. It can affect the gold price. For instance, the price increases whenever there is a disruption in the transport channel.

Supply and demand

Supply and demand of gold is an essential factor affecting gold's price. India is a festival-loving country. Weddings, festivals, and any other auspicious occasions are incomplete without gold jewellery. During wedding season and festivals, the demand for gold jewellery increases, causing a price hike in gold. 

Kozhikode's gold demand generally picks up between October and December, the time of Diwali, followed by the wedding season. It can also be a festival for jewellers and small businessmen who deal in gold. The yellow metal is a commodity that is continuously in demand and never goes out of style. Demand and supply play a significant role in the pricing of gold. 

Government reserves

The central bank (the Reserve Bank of India, or RBI) holds gold reserves along with the currency. When the RBI buys more quantities of gold than it decides to sell, It can result in a rise in the gold price. The reasons behind it are the increase in cash flow and less supply of gold.

As government gold reserves decrease, cash flow also decreases, which in turn affects the gold price.

Currency fluctuation

Any movement in the USD price affects the price of gold globally. Kozhikode imports a significant portion of gold. The gold rate is measured in dollars in the international market. When dollars are exchanged for the Indian rupee during import and export, the price of gold can fluctuate.

When the global market changes, it also affects the local prices in Kozhikode. As the dollar becomes stronger compared to the Indian Rupee, the purchase of gold becomes more expensive.

How is the Purity of Gold Evaluated in Kozhikode?

The Indian Bullion Association evaluates the purity of gold and the gold rate in Kozhikode. The jewellers in Kozhikode must include hallmarks to measure the purity of their gold products. They convert karats into percentages and check whether it is pure gold (24k gold) or 22 gold. It is mandatory to check the hallmark before buying any gold jewellery in this city.

This hallmark denotes that the gold is genuine. The hallmarking centres which are accredited by the Bureau of Indian Standards (BIS) carry out this process.
Before purchasing a gold item, make sure that the following hallmarks are present -

• BIS mark or logo
• Jeweller's identification mark or number
• Assaying centre's number or mark
• Fineness or purity level
• Year of production of the item

Impact of GST / Central Bank Policies on Gold Rates in Kozhikode

The Goods and Services Tax (GST) was introduced in 2017. According to this law, 3% GST is levied on gold articles and jewellery. Additionally, you also have to pay 5% GST on the making charges of converting raw gold into intricate jewellery designs.
The gold rate in Kozhikode is also affected by the Central Bank’s policies. Gold is considered to be a hedge against inflation. So, when the interest rate is decreased, gold’s demand will increase in expectation of higher returns. This will move gold rates upwards. Similarly, when the interest rates are increased, the demand for gold will go down. This might also cause the gold rates to go down.

Gold vs Other Investment Options

In Kozhikode, gold is considered the safest investment. Usually, there are different forms of gold, like coins, gold mutual funds, gold jewellery, gold exchange-traded funds, etc., in which one can invest. Gold is the perfect option for investment because the price of gold is rising day by day:

1. Gold coins

Gold coins, biscuits, and bars are some of the options for investing in gold in Kozhikode. You can get coins, biscuits, and bars of different weights on different budgets. It is easy to buy either from a newer store or the bank. Certified coins can be a great option for gold investments.

2. Gold mutual funds

There is another way to invest in gold, which is through gold mutual funds. Gold funds are known as mutual funds that invest directly or indirectly in gold reserves. Investments are typically made in the stocks of mining companies, physical gold, and syndicates that produce and distribute gold. It is an asset without having to purchase a physical form of a commodity.

3. Gold exchange-traded fund

An exchange-traded fund (ETF) that tracks the domestic physical gold price is known as a gold ETF. They are passive investment tools that invest in gold bullion and are based on gold prices. In a nutshell, Gold ETFs are securities that represent physical gold, either in the form of paper or in a dematerialized form.

4. Sovereign gold bonds

The RBI releases these bonds. You can purchase it through public and private banks. It is government security in grammes of gold. They serve as substitutes for actual gold. The issue price for investors must be paid in cash, and the bonds must be redeemed in cash when they reach maturity.

Comparison Between 24k Gold vs 22k Gold

24-karat gold is considered pure gold, whereas 22-karat gold is a mixture of some other metal in addition to gold. Since pure gold is a very soft metal, and gold jewellery needs to be durable, 22K gold is often the way to go for jewellers. 24-karat gold cannot hold its shape well; hence it is used for other investment-related purposes.

Here’s a quick snapshot of the differences between 22K and 24K gold: 

About 24k Gold:

• The purity level of 24k gold is 99.97%.
• 24k gold is used in medical and electrical devices
• It is more costly than 22k gold.
• Jewellery made of 24k gold is not durable, despite its brilliant colour.

About 22k Gold:

• The purity level of 22k gold is 91.67%.
• 22k gold is available in the form of jewellery and bullion.
• It is less costly than 24 gold.
• Due to the presence of other metals, 22k gold is more durable for making jewellery. 

Due to the presence of other metals, 22k gold is more durable for making jewellery.