Gold and silver have been under steady pressure for several days now, and that trend carried on into Wednesday. On 16 July both precious metals were trading lower on the domestic futures exchange, the MCX. The biggest reason for this softness is the cloud of uncertainty hanging over global markets. Rising tension between the United States and Iran has rattled investors, who fear the standoff could keep inflation elevated for a long stretch. If that happens, the US Federal Reserve may take a tougher stance on interest rates this year, and it is precisely this worry that is weighing directly on gold and silver prices.
How much gold and silver fell today
On the MCX today, gold shed 540 rupees, pulling the rate for 10 grams down to 141310 rupees. The slide in silver was even sharper. Silver dropped 924 rupees to settle at 219696 rupees per kilogram. The picture was much the same in the international market. On Comex, gold traded 0.27 percent lower at 4041 dollars an ounce. Silver, however, showed a little more grit, edging up 0.15 percent to trade at 57.52 dollars an ounce.
The metal's price isn't the only cost
If you are planning to buy gold or silver for a wedding or a festival, it is important to understand that you do not just pay the raw price of the metal. GST and making charges are added on top, and together they push the final bill up considerably. Suppose you want a 22-carat gold necklace, here is a full breakdown of what it will actually cost you.
What a 22-carat necklace will cost
Going by today's rates, if you have a 10-gram 22-carat (22K) gold necklace made, the metal alone will work out to roughly 1,29,535 rupees. This estimate is based on the 24-carat rate of 1,41,310 rupees per 10 grams. If the jeweller charges a 10 percent making fee, that adds another 12,954 rupees or so. A 3 percent GST is then levied on the total, which comes to about 4,275 rupees.
In other words, at today's rates the total cost of getting a 10-gram 22K gold necklace made could come to around 1.47 lakh rupees (roughly 1,46,760 rupees). If the design is heavy and intricate and the jeweller charges up to 20 percent as a making fee, that same bill can climb to nearly 1.60 lakh rupees.
Why prices slipped
US economic data has played a big part in this decline. Wholesale inflation figures for June came in weaker than expected, and before that retail inflation had also cooled. Those numbers strengthened the belief that the Federal Reserve is in no hurry to raise interest rates right now. But that relief has proved short-lived. On the other side, the deepening US-Iran tension has driven crude oil prices sharply higher, reviving fears that inflation could flare up again. Experts believe that if inflation stays elevated, the Fed could keep interest rates high for a long time. That is exactly why gold prices remain under pressure.
