Factors Affecting Gold Prices Across Indian States
LIjo James
Gold isn’t just a precious metal — it’s a store of value, a cultural symbol, and a popular investment in India. Whether you’re buying jewellery for a wedding or investing in gold bars or coins, you might have noticed that gold prices aren’t the same everywhere in the country. Even within India, the price you pay in one state can be slightly different from another. Understanding why can help you make smarter buying decisions and possibly save money while selling gold in India.
Factors Influencing Gold Rates
Gold prices in India are shaped by a mix of global market forces and local market dynamics. Here are the key factors.
1. International Gold Price
Gold is traded worldwide in US dollars. The international gold price sets the base for what gold will cost in India. When global prices rise, domestic prices usually follow.
2. Import Duty and Taxes
Most of India’s gold is imported. Customs duty on gold imports and GST, including GST on making charges, affect the final retail price. Even though GST is uniform, making charges and additional local levies can vary by region.
3. Transportation and Logistics Costs
Gold needs secure transport from port cities like Mumbai or Chennai to retailers across the country. The further the destination, the higher the logistics cost, and that can reflect in statewise price differences.
4. Local Demand and Jewellery Styles
Demand varies across regions. South India, especially Kerala, traditionally shows very high demand for gold jewellery. Higher local demand can keep prices elevated.
5. Jewellery Associations
Local bullion or jewellery associations sometimes influence pricing norms in their city or state. These associations update daily price lists based on local factors.
6. Macroeconomic Factors, Including Inflation
Rising inflation often weakens the value of money, making gold more attractive as a hedge. In times of economic uncertainty, demand for gold tends to rise, pushing up prices. This is why many investors look to gold when inflation is high.
Impact of GST on Gold Price in India
When you buy gold jewellery:
- 3% GST is charged on the gold value itself.
- 5% GST (or more) applies to making charges, which is the cost of crafting the jewellery.
Because making charges vary by jeweller and region, with more intricate designs costing more, GST on these charges also varies. This is one reason the final price you pay can be different from city to city.
Current Gold Price: Delhi vs Kerala (18 Dec 2025)
As of 18 December 2025, gold prices per gram are approximately: (Source)
| City / State | 24K Gold (₹/g) | 22K Gold (₹/g) |
|---|---|---|
| Delhi (example) | ₹13,499 | ₹12,375 |
| Kerala (example) | ₹13,461 | ₹12,330 |
Although these numbers are broadly close, you may still see slight differences of around ₹100–₹200 per gram due to local demand, retailer pricing, and making charges.
Why does this difference exist?
In states like Kerala, gold jewellery demand is traditionally very high, especially for weddings and festivals, which can push local prices upward. Logistic costs and jeweller pricing strategies also play a role. In contrast, markets like Delhi, while large, may have more competition among jewellers, helping balance prices.
Conclusion
Gold rates in India aren’t random. They are driven by a mix of global benchmarks, local demand, tax structures, transport costs, and economic conditions like inflation. That’s why the same piece of gold jewellery might cost a little more in one state than another.
Understanding these factors helps you make smarter decisions, whether you are buying gold jewellery for a festival, investing in coins and bars, or comparing city-wise gold rates before your next purchase. If you are planning to sell your gold, choosing a transparent and reliable gold buyers in Kerala becomes just as important, as local pricing, demand, and making charges can directly impact the value you receive.
FAQs Regarding Gold Pricing Fluctuations
Why is gold price higher in some Indian states than others?
Gold price differences come from local demand, transportation costs, jewellers’ pricing, taxes, and making charges specific to each region.
How does inflation affect gold rates?
When inflation rises, people tend to invest in assets like gold to preserve value, increasing demand and often driving up gold prices.
What does GST cost on gold jewellery?
Typically, 3% GST applies to the gold value and around 5% on making charges, though making charges vary by design and jeweller.
Should I compare gold prices before buying?
Yes — comparing rates (especially if you can travel or have access to different city rates) can help you save money, as local factors affect pricing.
Where in India is gold cheapest?
There isn’t a single city with the “cheapest” gold all the time — it depends on day-to-day market conditions, demand, and jeweller pricing strategies.