Gold, Knowledge

Why is There a Difference in the Buy and Sell Price of Gold?

For Indians, gold has always been more than a metal. Apart from being treated as one of the safest investment options, it is believed to be god’s currency. That is one reason many temples and statues are made of gold. People offer gold at temples. All in all, we can say that Indians have an emotional value with this yellow metal. Indians buy gold jewelry for using and gifting during festivals and marriages. In addition, they buy gold in the form of coins, biscuits, bars for investment purposes and sell it when they need money. 

Why is There a Difference in Buy and Sell Price of Gold?

A large demand for gold in India is met through imports. As a result, the gold prices in India are deeply affected by the price of gold in the international markets. Contrary to what most people believe, the paper gold market regulates international gold prices. According to recent research, the gold prices are derived from London Over-The-Counter (OTC) spot gold market trading and COMEX gold futures trading.  

All other markets, including the Shanghai Gold Exchange (SGE), Multi Commodity Exchange (MCX), and even physical gold markets globally, follow these prices. In India, the gold prices are determined by the Indian Bullion Jewellers Association (IBJA), a group of the biggest gold dealers in India.

Buy and Sell Price of Gold

Reasons that Determine Buy and Sell Price of Gold

Gold prices are subject to market conditions as well. Some of the factors that play a crucial role in determining the gold prices are listed below:


The gold prices have a direct relation with inflation. When inflation is more, customers tend to buy more gold to hedge them against inflation. As a result, when inflation increases, the gold prices go up and vice versa.

Gold Reserves Held By the Government

The RBI, on behalf of the government of India, maintains the balance between currency and gold reserves. When the RBI starts holding gold reserves, the cash flow in the market increases while the supply of gold decreases. As a result, the price of gold goes up. 

The Global Movement of Gold Prices

India is the largest importer of gold. Hence, whenever there is any price fluctuation because of any global happening, it affects the gold prices in India.

In any country, the current gold prices are an indicator of interest rate trends. When the interest rates are high, people tend to sell their gold and convert it into cash. This increased supply reduces the price of gold. And when the interest rates are low, people start investing in gold. This increased demand increases the prices.

Change in Market Demand

In India, there is a massive demand for gold jewelry during the wedding and festive season. This increases the gold prices during these times.

Why is Selling Price Lower Than Buying Price in Buy and Sell Price of Gold?

Because of the reasons mentioned above, the gold prices constantly fluctuate. The prices do not remain the same for an extended period of time. The two main reasons for this price fluctuation are:

Demand and Supply Dynamics

The gold mines produce a fixed amount of gold per day. So, supply is more or less constant. But the demand for gold is not. During festivals, wedding seasons, and on special days, the demand for gold goes up. During this time, the gold prices go up.

Market Conditions

Another reason for variation in gold prices is market speculation. The market is always agog with speculations regarding the policy of government and RBI. The investors keep speculating about various possibilities and act accordingly. 

Psychological Reasons

People treat gold as their best friend at their best time and do not sell it unless they are in need of money. There is this psychological fact that primarily people sell gold during distress or need, and at that time, they are not in the best position to bargain.

Because of these reasons, gold prices are always volatile. They may go up or down. That is why, when people want to buy gold, they pay a higher price, but when they decide to sell it, the gold selling price is somewhat lower than the gold buying price for that day. 


The love for gold among Indians is known to one and all. Indians love to wear and invest in gold. Hence, there is also a lot of selling and re-purchasing of gold that happens, therefore one should always be careful about the source from which they are purchasing the gold.

There is always a difference in the selling price and buying price of gold. This is because, gold prices are volatile and hence when someone buys gold from you, the person is taking a risk. To compensate for that risk, the person offers a price lower than the gold prices that day. That’s why; gold selling prices are always lower than gold buying prices.

While this difference is always there, buying/selling gold at trusted platforms like OroPocket helps you get the best possible gold selling prices. OroPocket is a universal investment platform and a trusted name in the industry. The platform allows users to buy, sell, pay, and get paid using digital assets instantly. So, whenever you need to buy gold or sell your holdings in gold it never has to take more than a second!