How is gold rate in Chennai determined
The gold rate in Chennai is usually decided by jewellers Associations in the city. The jewellers in these Associations arrive at a price based on international prices and by including gold import duty, since almost all the gold sold in India is imported. Additionally when bills are demanded, a Value Added Tax (VAT), currently 1% in Tamil Nadu, is also added to the calculation. (Note: Buying hallmarked gold and demanding bills is something every gold buyer must insist on. Read why here.)
Some prominent gold jewellery chains though decide to go with their own rates.
It is not like there is no method to the madness.
One of the ways in which this gold rate is calculated is as follows:
The Indian Bullion and Jewellers Association (IBJA) that's almost 100 years old and based out of Mumbai puts out daily rates, twice a day - once in the morning and once in the evening - for gold of 999, 995 and 916 purity. These are the rates that even the Indian government follows to arrive at the price of the Sovereign Gold Bonds that they issue. To this rate is added the gold import duty (currently 10%) to calculate the daily gold rate.
On this rate, the jewellers based on demand and the headroom they have, decide whether or not to give a discount. If demand is high, usually they won't offer discounts on the base price unless they feel it could stoke further demand. But when demand is muted and when the gold in their books has piled up, they decide on a discount they feel won't impact their bottomline.
Note that jewellers have many ways in which to cover up this shortfall. (Read: A checklist for every gold buyer!)
Gold jewellery in Chennai
The Chennai gold market is one of the biggest in India.
T Nagar, termed the golden corridor/golden zone, accounts for a significant share of the gold sold in Chennai.
An estimate made in 2015 suggested that T Nagar alone sells close to 17% - a mindboggling 150 tonnes that year - of the gold jewellery sold in all of India!
The two showrooms of the over 50 years old GR Thangamaligai (GRT) in T Nagar are stretched over 50000 square feet. In the retail hub of city, Kalyan Jewellery, meanwhile, runs what it terms the world's biggest gold jewellery showroom, spanning 40000 square feet.
At walkable distance are also the biggest showrooms of Tanishq, Lalithaa Jewellery, NAC Jewellers, Malabar Gold, Prince Jewellery, the LKS Gold House, Sri Kumaran, Kerala Jewellers, Saravana Stores, Nalli Jewellers (a 30000 square feet showroom) and Joy Alukkas (another 30000 square feet showroom).
There are also other areas in Chennai like Velachery (recently turning increasingly popular), Mylapore, Adyar and Anna Nagar that host showrooms of leading gold jewellers, but T Nagar remains the undoubted epicentre.
If you intend to buy gold, make it a point to purchase it from one of the currently 204 BIS hallmarked gold jewellery showrooms in Chennai. (Interesting tidbit: Did you know that there are an almost staggering 4-lakh-plus gold jewelers in India?)
Hall-marking centres in Chennai
Only 30% of the gold sold in India is hallmarked! As experts have noted there are shocking differences in purity and the average under-caratage is anywhere from 10-15%!
So, like we stressed earlier ensure the gold you buy in Chennai is hallmarked.
Hallmarking of gold in Chennai is currently done in 21 BIS hallmarking centres (with one-third of them being in T Nagar). In total, there are 54 BIS hallmarking centres across Tamil Nadu, second only to the 67 in Maharashtra.
Want to double-check your BIS-hallmarked gold in Chennai?
You can get your hallmarked jewellery tested at any of the 21 BIS recognized Assaying and Hallmarking Centres in Chennai. This testing will be done on priority but does involve your paying for the process. The Assaying and Hallmarking centre will then have to issue an Assay Report.
In case your jewel is found to be of lesser purity than what the BIS hallmark had promised, the testing charges paid by you will have to refunded by the hallmarking centre that had originally hallmarked the jewellery. The jeweller also will be forced to offer you a like-for-like replacement lives up to the hallmark, beside paying the due fine.
Popular gold jewellery in Chennai
According to a recent survey by the World Gold Council, bangles and chains are the most sought after and contribute between 30%-40% of the demand. Necklaces contribute between 15-20% and rings - ear rings and finger rings - between 5-15%.
Biggest driver of gold jewellery demand in Chennai
The biggest driver of gold jewellery demand in Chennai remains bridal jewellery (50-55%). Daily wear jewellery accounts for another 35%-40% of demand and Fashion jewellery 5-10%.
What Chennai’s brides wear
If we were to go by a recent World Gold Council survey, beside the mangalsutra, these gold bangles are considered essential - the Muthu Valayal, Lakshmi Valayal and Kemu Valayal.
Among earrings it is the Kempu Kal Jhimkki that occupies pride of place. In necklaces the more famous ones are the Lakshmi Haram and Muthu Haram.
The ottiyanam, nethichutty and jadai billai are also considered essential as is the vella kal mookhuthi (nose ring).
When does Chennai buy its gold
The wedding season, and festivals - Akshaya Tritiya, Diwali/Dhanteras, Pongal, Tamil New Year and Makara Sankranthi are the big gold-buying occasions in Chennai.
Other popular occasions for buying gold are birthdays and anniversaries and gifting occasions.
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