The days of spot prices of gold differing from one city to another willsoon be over. The launch of the Indian Bullion Market Association (IBMA), whichwill represent the Indian bullion trade and industry, will ensure the countrynow has a uniform price of the yellow metal.

The difference, if any, will only be due to varying taxes levied by thedifferent state governments. There is no mechanism at present to let consumersknow the spot price of gold in different cities during the day. In Mumbai, theBombay Bullion Association announces indicative prices of gold every evening.

The prices will be determined on the basis of actual buying and selling done onthe spot electronic platform, NSEL, set up by the Financial Technologies Group.The mechanism will be similar to that followed by the London Bullion MarketAssociation (LBMA) which announces the global reference price every day in themorning and the evening.

IBMA was expected to catapult India as the price setter in the global bulliontrade, Sinha said. “With the creation of IBMA, we will be able to create abenchmark Indian spot price for bullion,” he added. IBMA will also addresstrade-related issues for the benefit of the bullion sector and will certify andaccredit refineries for recycling qualitative gold bars.

The development is significant as a benchmark price can increase the bulliontrade volumes dramatically. Sinha said a truly uniform gold price across thecountry would be possible only after the introduction of the Goods and ServicesTax by March 2011.

IBMA has been set up with an initial capital of Rs 20 crore, in which NSEL willhave a 51 per cent equity stake. The balance 49 per cent will be held by tradebodies and individuals.

“By bringing together bullion dealers and jewellers, IBMA will address globalbullion issues and reduce disparity between domestic prices and internationalprices. It also aims to create linkages between the domestic stock of gold andsilver,” Bombay Bullion Association President Suresh Hundia said.