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How To Calculate The Gold Price For Jewellery?

Usually every city has its own gold jewellers association which declares gold rates every day. So how do jewellers calculate the jewellery rates? Click here to know.

30 May,2024 11:03 IST 3007
How To Calculate The Gold Price For Jewellery?

In India, gold is considered beyond just a yellow metal; it is an investment packed with returns for long-term needs. Gold jewellery is a fond backup resource for times of financial lows. Moreover, some even buy gold with the sole intention of selling it off for higher returns in the longer run, making it a more dependable investment than most financial instruments.

However, while jewellery shopping, you may find it odd that every shop has different pricing attached to gold items. The rate of gold is standardized as per its purity (in karat) and weight (in grams), but there is no standardized pricing for every gold item in the market. This is where you need to understand how to calculate the gold rate.

Gold traders and retailers operate per the daily price set by the local Gold Jeweller’s Association every morning. This is why each town and city across India has some price differences, even for the same weight of gold jewellery. Several factors affect the final price of jewellery items that you purchase. These factors include:

  • Rate of gold
  • Modifications to the gold
  • Gemstone value
  • Taxes involved

The Formula To Calculate The Gold Rate Is:

Final Price Of A Gold Item = Price of gold per gram (of purity between 18-24 karat) X (The gold weight you purchase in grams) + Making charges of jeweller + GST of 3% on (Jewellery Cost + Making charge)

How To Calculate The Gold Rate

Let’s consider you want to purchase a 10.5-gram gold chain of 22 karat purity. The jeweller you choose lists the price for 10 grams of gold on a specific day at Rs. 43,000. The making charges stand at 15 per cent of the listed price. Therefore, the final price you must pay for the gold chain will stand calculated as under:

Price for 10 grams 22 Karat gold = Rs. 43,000
Price for 1 gram 22 Karat Gold = Rs. 43,000/10 = Rs. 4,300
Price for 10.5 grams of 22 Karat Chain = Rs. 4,300 * 10.5 = Rs. 45,150
Making charges added = 15% of Rs. 45,150 = Rs. 6,772

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Therefore, the final value of this gold chain excluding all taxes = Rs. 45,150 + Rs. 6,772 = Rs. 51,922

When you apply GST @ 3% on this total price, you get 3% of Rs. 51,922 = Rs. 1,558
Finally, the chain’s total price with tax added is Rs. 51,922 + Rs. 1,558 = Rs. 53,480

Therefore, you need to pay Rs. 53,480 for this jewellery purchase.

Tips To Help You Know How To Calculate The Gold Rate

There are a few things that you must consider when buying gold.

  1. When you purchase any gold jewellery studded with precious or semi-precious stones, make a special note that the gold value stand calculated will be as per the jewellery weight MINUS the weight of all the stones studded in it. The gemstone costs get added separately.

  2. Making charges vary from jeweller to jeweller. You must keep track of the same when finalizing the price of gold jewellery.

  3. Jewellery is available in the purity of up to 22 karat gold. When you have gold jewellery sourced from a reliable source, you can readily obtain gold loans from NBFCs such as IIFL Finance.

Get A Gold Loan With IIFL Finance

Minimal documentation, quick disbursal times and hassle-free processing of gold loans from IIFL can save you from cash crunches in future. As one of India's quickest disbursers of gold loans, IIFL Finance provides gold loan interest rates as low as 0.83% per cent per month and offers a minimum loan amount of INR 3000. Reach out to us to avail your gold loan or visit us at the nearest branch in Mumbai.


Q1. Do I Have To Provide Original Bills Or Certificates And My Gold Jewellery For Gold Loan Processing At IIFL?
Ans. If you have them available, you may carry the same to our branch. However, for older jewellery wherein such bills are unavailable, you can bring us your jewellery, and we will do the needful.

Q2. Is There A Minimum Loan Amount IIFL Sanctions For Gold Loan Customers?
Ans. Yes, the minimum gold amount stands at Rs. 3000. IIFL Finance disburses an amount it deems fit on a customer-to-customer basis.

Q3. Can I Check How Much Gold loan I Am Eligible For With IIFL Finance?
Ans. Yes, you can drop by using the gold loan calculator embedded on the IIFL Finance website.

Q4. How is gold value calculated?

Ans. The value of gold is calculated by using a simple formula.

Gold Value = Gold rate (on that day) x weight of gold (in grams) + Making charges + GST. Essentially you arrive at the value of the gold you possess by multiplying the prevailing price of gold (on that day) with the weight of the ornament (in grams), and add to it the making charges and applicable GST. 

Q5. How do you calculate 916 gold?

Ans. 916 gold is nothing but 22 carat gold. 916 is basically used to denote the purity of gold in the final product, i.e. 91.6 grams of pure gold in 100 gram alloy. So in order to calculate the price of 1 gram of gold, multiply the current gold rate per gram by the purity percentage of the gold item. For instance, if the current gold rate is ₹4,000 per gram and the gold item is 22-carat (91.6% pure), the price for 1 gram would be ₹4,000 × 0.916 = ₹3,664.

Q6. How do I calculate the gold price per gram?

Ans. To calculate the gold price per gram, two factors are taken into consideration: the prevailing gold price on that day and the purity of the gold. Let's say the gold rate is currently ₹10,000 and the gold item is a 22-carat gold which id 96.1% pure, then as per the formula the gold price per gram = 10,000 x 0.916 x 1 = ₹9160. Additional making charges and GST will also be added further. 

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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