I was checking the ‘Sell Price’ for my digital gold on PhonePe, and it seems lower than the gold rate I see on a jeweller’s website. Why is there a difference?
The ‘sell price’ for digital gold on PhonePe and the ‘gold rate’ advertised by a physical jeweller are two different things and cannot be directly compared. The digital gold sell price is part of a live, transparent wholesale quote, while a jeweller’s advertised rate is their retail selling price, not the price at which they would buy gold back from you.
Understanding the ‘Buy-Sell Spread’ for Digital Gold
My friend was looking at the prices on his PhonePe app and noticed the ‘Buy Price’ for 1 gram was, for example, ₹7,000, while the ‘Sell Price’ at the same moment was ₹6,800. I explained that this difference is called the spread. This is the margin that covers the provider’s costs for services like secure vault storage, insurance, and transaction processing. You always sell your digital gold back at this slightly lower live rate.
Comparing Digital ‘Sell Price’ with a Jeweller’s ‘Buy-Back’ Price
I advised my friend that comparing PhonePe’s ‘Sell Price’ to a jeweller’s advertised rate is a mistake. The rate advertised on a jeweller’s website is the price at which they sell gold to customers. If you were to take a physical gold coin and sell it back to that same jeweller, their buy-back price would also be significantly lower than their selling rate, as they have to account for their own profit margin and costs.
The Impact of Purity and Making Charges on Physical Gold’s Value
My family jeweller explained another key difference. When he buys back physical jewellery, he first has to test its purity (is it 22-carat or 24-carat?) and the price is adjusted accordingly. More importantly, the making charges that a customer paid when they originally bought the jewellery are a sunk cost and are not refunded in the buy-back value. The digital gold sell price, in contrast, is a straightforward quote for pure 24k gold.
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