Why are gold prices soaring from jewels planet's blog

The appeal of gold is universal. Having gold in possession is a sign of affluence and prestige. People love to flaunt their gold possessions not just in India but all over the world.

Gold is also considered sacred and offered for religious purposes as well. It is a common practice to give gold to family and friends on special occasions.

Ironically, the yellow metal comes at a very high price. And after the recent pandemic, the prices of gold have risen exponentially. Otherwise, over the past few years we saw a stable rise in gold prices. But why this unexpected hike in gold price, let’s find out together.

What makes gold so costly?

Gold is a rare metal with some valuable properties. It entails elaborate processes to extract gold and make it ready for use. Additionally, it is a precious metal that has following unique elements to it-

●    Gold is an irresistible commodity- As mentioned above, gold has a global charm. People love to buy or gift gold on various occasions. Whether a birthday celebration, anniversary, festival, or religious event, gold excites people like no other metal. This makes it hugely in demand irrespective of the supply.

●    Gold mining is a tedious process- Making gold available in the market for use is a painstaking process. Starting from extraction of gold to making it market-ready in the form of  ornaments, gold coins, or gold bars involves complicated processes. All this adds to the cost of gold.

●    Unforeseen circumstances create an imbalance of supply and demand- The world witnessed a major economic upheaval in the past two years, owing to the pandemic. The lack of manpower and erratic transportation led to a decline in extraction and processing of gold. The demand for gold has always been healthy but with the lack of supply, the prices of gold are bound to witness a steep hike. Another factor that hit the supply of gold recently is the Ukraine war.

●    Gold is valuable even when broken- Gold maintains its sheen over a hundred years and even more. It is, therefore, a prized heirloom that passes on within generations. Whether a lost earring, a broken bangle, or an overused necklace, you can still exchange them for cash against gold. It is a great saviour during stressful financial times because selling it fetches you instant payment. Of course, this timeless sheen makes gold a costly metal.

The New Gold Rule

The Bureau of Indian Standards (BIS) enforced a New Gold Rule from June 1, 2022. Under this rule, all gold items that one wants to sell must have the Hallmark certification. Earlier Hallmark certification was required only for 14K, 18K, 20K,  22K, 23K, and 24K carat gold pieces. Now, you need hallmarking even for 19K and 21K carat gold.

This new rule saves the interests of gold buyers as earlier jewellers could easily pass off fake pieces or inferior quality items as pure gold. This rule applies to gold coins, gold artifacts as well as gold jewellery.

Can you Hallmark fake gold?

Hallmark certificate is a globally accepted certificate for certifying the purity of gold.

The Bureau of Indian Standards is the authorized signatory that issues the Hallmark certificate. Genuine gold sellers have no issues in hallmarking their gold.

But can dubious sellers hallmark the inferior quality gold that they sell? Sadly, it is true. In India, it is a common practice where fake jewellers use their own hallmarking machines and pass off the adulterated gold as a real one.

Of course, it means that having a Hallmark certificate or hallmarking your gold doesn’t guarantee purity.

Is there a solution?

The good news is that there are AHCs (Assaying and Hallmarking Centers) that test the purity of gold items. These recognized centers undertake the testing of gold to assess its purity and issue a test report for the same.

As a customer, you can take this report to your jeweller and ask him for compensation in case of any discrepancy.

On the other hand, if AHC issued you a purity certificate and your gold turns out to be of an inferior value, then AHC is also bound to give you reimbursement.

This also gives edge to the customers who want to sell gold for cash in emergency situations.

Bottom line

Buying gold is a high value transaction. So, it is better to be safe than sorry. Take precautions and be alert so that you are not the victim of any fraud activity.