How do fluctuations in gold prices impact your gold loan

Learn how changes in the price of gold can affect your gold loan interest rate, loan amount, repayment terms, and more. Check your gold loan eligibility today and get the best possible value for your gold jewellery.
Gold Loan
2 min read
28 April 2025

How the market gold rate affects your gold loan value

With gold prices rising, Indian consumers are understanding the true value of the jewellery lying idle at home. Gold is regarded as a safe and reliable asset that can be easily liquidated in times of financial emergencies. This makes gold loans a great way to obtain instant funds to cover all your urgent needs.

Gold loans are a type of secured loans – you can pledge your gold jewellery and borrow money against it. When you repay the loan, you can take your gold back.

Gold loan interest rates are typically lower than those for other loans, and the actual value of the loan depends on the current gold rate. These loans come with a very basic eligibility criteria. Almost anyone with gold jewellery of 18-22 karat purity can apply for the loan.

And that is not all. You need just your gold loan documents like any one of your KYC documents – Aadhaar Card, voter ID card, passport, or driving licence to get a Bajaj Finserv Gold Loan.

With quick processing and large loan amounts (we offer loans of Rs. 5,000 to Rs. 2 crore), gold loans have risen in popularity over the last few years.Now that you know how easy it is to get a gold loan, let's discuss how the market rate of gold impacts gold loans.

Reasons why gold rate fluctuates

Gold is seen as a safe and valuable asset across the world. However, gold rate fluctuation is common and can impact your buying and investment decisions. Let us look at the major reasons behind gold price fluctuation and what drives gold fluctuation price in India:

  • International market trends:
    Global gold prices set the tone for local rates. Any major event in international markets can lead to gold rate fluctuation in India.

  • Currency value changes:
    When the Indian rupee weakens against the US dollar, gold price fluctuation becomes more noticeable, as gold is traded globally in dollars.

  • Demand and supply:
    During festive and wedding seasons, the high demand for gold causes a sharp gold fluctuation price across cities.

  • Inflation rates:
    Gold acts as a hedge against inflation. When inflation rises, the demand for gold increases, leading to gold price fluctuation.

  • Interest rates:
    Lower interest rates make gold more attractive as an investment, contributing to gold rate fluctuation.

  • Government policies and import duties:
    Changes in import duties or government policies can cause gold price fluctuation in the domestic market.

Keeping an eye on these factors can help you plan your gold purchases better and take advantage of price movements.

Impact of gold price fluctuations

The demand for gold loans is closely tied to the market price of gold. When you apply for a gold loan, the amount you can borrow depends on factors such as the weight and purity of the gold ornament, as well as the current market rate of gold.
 
The changes in the market price of gold are an important factor in determining the baseline value of the gold loan. The loan to value for gold loan plays a crucial role here, as it represents the percentage of your gold’s value that can be borrowed. Fluctuations in the gold rate directly impact the loan amount you are eligible for. As per RBI regulations, most lenders offer a maximum loan to value for gold loan of up to 75%, ensuring that borrowers get fair access to funds while protecting lenders against market volatility.
 
For instance, if you pledge gold with a current value of Rs. 1 lakh, the highest loan amount you can receive is Rs. 75,000. However, if we suppose that the price of gold increases by 5%, the value of the gold that was worth Rs. 1 lakh will now be worth Rs. 1.05 lakh. In this scenario, the LTV ratio of 75% would equal Rs. 78,750. In other words, borrowers can obtain a larger loan amount if the value of their gold increases.

Bajaj Finance provides gold loans at the most competitive gold interest rates, with easy eligibility requirements and minimal paperwork. The loan amount can be disbursed within a few just a few hours.

How to apply for a Bajaj Finserv Gold Loan

You can follow these simple steps to apply for a Bajaj Finserv Gold Loan:

Step 1: Click on the ‘APPLY’ button to open the online application form.

Step 2: Enter your name and mobile number.

Step 3: Type the name of your city and select the branch closest to you.

Step 4: Submit the OTP sent to your phone and complete the online process.

A Bajaj Finance representative will assist you with an appointment at your preferred gold loan branch.

You are invited to visit us with your 18-22 karat gold jewellery at the time convenient to you. Our staff will evaluate the purity of your gold jewellery and process your application.

We will keep your gold jewellery safely in a state-of-the-art vault. Your gold will be kept securely and returned to you when you complete your repayment tenure. We also offer free insurance for the gold while it is in our custody.

It is really that simple. Get a gold loan of up to Rs. 2 crore to meet any of your planned or unplanned financial needs.

With lightning quick processing at more than 800 branches across the country, we will do our best to get you the funds you need in an easy and hassle-free way.

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Why is the gold rate fluctuating today?

The gold rate fluctuates today due to changes in global demand, currency movements (especially the US dollar), international gold prices, and local market conditions. Political events, economic news, and market uncertainties can also cause sudden changes in gold prices.

How does gold price fluctuate?

Gold price fluctuates based on global market demand and supply, currency strength, inflation levels, and economic conditions. When investors feel uncertain about markets, they often buy gold, causing prices to rise. If markets are stable, gold demand falls, and prices may drop.

Why do gold prices fluctuate frequently?

Gold prices fluctuate frequently because of changing market conditions, daily currency value shifts, inflation rates, and changing interest rates. Even small political or economic events worldwide can lead to quick changes in gold prices.

How does inflation affect gold price fluctuation?

When inflation rises, the value of money falls, and people prefer to invest in gold to protect their savings. This increased demand pushes gold prices higher, leading to greater gold price fluctuation during periods of high inflation.

How do changes in interest rates impact gold rate fluctuation?

When interest rates rise, people prefer saving money in banks rather than buying gold, causing gold demand and prices to fall. When interest rates drop, gold becomes a better option for investment, leading to higher demand and gold rate fluctuation.

Are gold price fluctuations the same across all countries?

No, gold price fluctuations are not exactly the same in all countries. While international gold rates set the base price, local factors like taxes, import duties, currency value, and demand can cause price differences across countries.

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