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written by | April 29, 2022

Steps to Calculate the Gold Price for Jewellery

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In our country, gold is bought most commonly in the form of jewellery. We Indians purchase it on different occasions and purposes. Our tradition promotes gold jewellery, making it an item of status. While this we find that prices vary from place to place. Apart from this, people also purchase gold in the form of investment. It has always been profitable. With time we find profit in gold as the price increases.

In the country, gold bonds value is the same throughout the country, but its price in the form of jewellery is not the same. From the data on gold rates in our country, we can see how fluctuating its price is. However, it is generally in the upward trend. There has been no single system for gold rate calculation in our country until now. For the variable prices, we do not question the jewellers nor think about the system behind gold rate calculation. Here, we will find the answer to this interesting question.

Did you know?

Gold prices vary because there is a gold jewellery association in every city and town. These associations declare the rates in their respective places every morning through newspapers and websites. We find that prices are different. Whenever the price of jewellery is quoted, then it is not the actual price. It includes the actual price of the gold used per purity, making charges, GST ( Goods and Services Tax) rates, metals mixed, purity, etc. We should not take the quoted prices as actual ones. Jewellers use the same gold rate calculation system.

Also Read: How to Start a Jewellery Business

How to Determine the Price of Gold?

Final price of the jewellery = price of (22 ct or 18 ct) gold X (Weight in grams) + making charges + GST on (Price of jewellery + making charges). 

This is the gold rate calculation formula used by the jewellers. While using this, also rates vary due to other factors like making charges, purity, GST rates ( Goods and Services Tax) and the price of the mixed alloy.

Let's see an example of a gold rate calculation.

  • Suppose that the current rate of 10 grams of 22 carats pure gold is ₹30,000.
  • The price of 1 gram of gold will be ₹3,000.
  • If you want to make a gold chain, weigh 9 grams. The price of it equals nine times ₹3,000 ( ₹ 27,000).
  • If the making charges are 10% of the gold price, it is ₹2,700.
  • The total price becomes ₹27,000 + ₹2,700 ( equals ₹29,700).
  • Now add 3% of GST on gold( 3% of ₹29,700).
  • ₹891 plus ₹29,700 equal to ₹30,591.

We also often want to find the resell value of the gold. For this, we also sometimes need to calculate the old gold jewellery rate while determining the value of the gold ornaments. People in our country buy gold, and they also sell it. To calculate the value of old gold today, we use some other formulas. How to calculate the old gold rate? Here is the answer. We first need to find the value of gold and its purity in carats or percentages by gold testing in specified labs or through a jeweller. Then after we can use the formulas:

  1. Value of gold in the sample = (Weight of Gold x Purity of Gold x Rate of Gold today) / 24( in terms of carat purity).
  2. Value of Gold in the sample = (Weight of Gold x Purity of Gold x Rate of Gold today) / 100.( in terms of percentage purity).

Let's see an example of an old gold rate calculation.

  • If the 10 grams of gold are taken at 20-carat purity, 83.3% purity, and ₹6000 is the price per gram.
  1. Value of gold today( carat purity) = (10 x 20 x ₹6,000)/ 24= ₹50,000.
  2. Value of gold today( Percentage purity)= (10 x 83.3 x ₹6,000)/ 100= ₹49,980.

How Do Jewellers Calculate Gold Jewellery Rates?

As discussed earlier, jewellers in our country do not have the same rate for various reasons. They use a fixed formula for particular purity with a fixed weight, GST and making changes. Then also, prices differ. The jewellers’ formula for gold rate calculation is:

Final price of the jewellery = Price of (22 ct or 18 ct) gold X (Weight in grams) + Making charges + GST on (Price of jewellery + making charges).

From this, the only difference arises. The making charges range from 6% to 14% of the total price of gold. Some jewellers also charge a fixed rate per gram of an amount or percentage of the total price. We need to get it at a low cost of making a charge, which will bring a better deal during resale. Gold rate calculation is subjective in itself.

Apart from this, purity and mixed metal price also affects the price. Hence, we can find the same gold jewellery of specified weight at different prices.

Due to these varying factors, we can not take the price as the actual price of the gold. If you are interested in purchasing or investing in gold, the Khatabook app offers you a safe and secure method for doing so.

Also Read: How to Establish an Imitation Jewellery Business in India

Factors Affecting Gold Rate Calculation

  • Purity

Whenever we buy gold jewellery, we ask about the carat. The purity of the gold is in terms of a carat. In the jewellery, 24 carat is the purest form. However, it is not suitable for making jewellery. We use 22 carats of gold for jewellery. We add different metals like silver, zinc, copper and others. The extra used metals also determine the gold's colour and shine with its durability. Moreover, the added metals also make prices vary.

  • Gold Pricing

As discussed earlier, jewellers use purity and types of metals gold due to different reasons. These are the only two main factors determining the price of gold. Daily national pure gold prices are announced in the newspapers and websites, and gold is traded daily. The demand and supply of gold are also part of the gold rate calculation. We can see the price change due to the source from which we are buying and at what price.

Another thing is the difference in the buying and selling of the jewellery rate by the jewellers, which causes an unstable gold rate. The gold's added metals count for nearly 3% of the gold price, and the difference is minimal.

Let's understand this through an example:

Suppose the price of gold is ₹3,000 per gram. The cost of 18 carats will be ₹3,000 x 18/24= ₹ 2,250 per gram. The rate of alloy to be added is ₹40 to ₹70. The selling price will be ₹ 2,250 + ₹70= ₹2,320.

  • Making Charges

This is another major factor causing the gold rate to vary, making charges of the jewellery substitute around 6% to 14% of the gold rate calculation. Every jeweller charges different prices for it, and some of them have a fixed rate of making per gram or a fixed percentage of the total cost as the making charges. Here, in the making charges, customers can bargain with the jewellers. Making charges is not set throughout the nation. Due to bargaining, the same jewellery can differ in cost for different customers.

  • Studded Jewellery

These days, studded jewellery of gold is the trend. For highlighting and glittering, people fix gems in the gold jewellery. When we purchase it, the real price of gold will differ if we take the price as per the weight. People should be aware of the cost in that case if we purchase it and again resell it. We get a loss on it. You should deduct the price of the stone, gem or any affixed item in the jewellery from the total price. So, we can find the actual gold price.

Conclusion

In concluding the topic, we can say how the gold rate is calculated. Using the formula Final price of the jewellery = Price of (22 ct or 18 ct) gold X (Weight in grams) + Making charges + GST on (Price of jewellery + making charges), we can find it. The rate of old gold can also be termed today's prices. Gold rate calculations differ from place to place due to reasons like purity, making charges and mixed alloys rates in the market. So, a customer can find the different jewellery prices at various locations. However, we can bargain on the making charges rates while purchasing the gold. In our country, making charges is also different in different places. Jewellers can calculate making charges per gram of gold. Moreover, jewellers also charge a specified percentage of gold as making charges. It is crucial to note that making charges is important while calculating the gold rate.
Follow Khatabook for the latest updates, news blogs, and articles related to the gold industry.

FAQs

Q: What is the formula of the old gold rate calculation?

Ans:

  1. Value of Gold in the sample = (Weight of Gold x Purity of Gold x Rate of Gold today) / 24( in terms of carat purity).
  2. Value of Gold in the sample = (Weight of Gold x Purity of Gold x Rate of Gold today) / 100.( in terms of percentage purity).

Q: Why do the prices of gold jewellery vary?

Ans:

The gold rate calculation depends on making charges, GST rates, the price of mixed alloys and purity. These things vary in price from jeweller to jeweller and place to place. So, the prices of gold jewellery vary.

Q: Is there a standard way for gold rate calculation?

Ans:

No, there is no standard way of determining the price of gold. Jewellers use the following formula: Final price of the jewellery = Price of (22 ct or 18 ct) gold X (Weight in grams) + Making charges + GST on (Price of jewellery + making charges).

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.