How are the prices of gold determined in India?

For a precious metal that is one of the most demanded commodities in India, gold prices are still largely driven by global factors. In fact, the jewellery demand in countries like India and China can at best act as a support for gold prices. They cannot really drive the price of gold up; or even down. The major movements in gold prices in the last 50 years have happened due to the interplay of global factors. Let us take the example of one of the biggest bull runs in gold. In 1971 when the US pulled out of the gold standard, gold was quoting at $35/oz (1 oz = 31.1025 gram). Between 1971 and 1980, the price of gold moved up from $35 to a whopping figure of $900/oz. This remains the greatest Bull Run ever seen in gold. Let us look back at the factors that influence the price of gold in global markets. As we said earlier, it is the global gold rate that acts as the benchmark for setting the price of gold in the Indian markets.