How to Calculate Gold Rate: All You Need to Know

Harshita Singh, a financial expert from New Delhi, visited an established jewellery store in Karol Bagh on May 12, 2025, to purchase gold for her daughter's wedding. She had been interested in the gold market that morning; the 24-carat gold price had dropped to ₹94,294 per 10 gram, a dramatic ₹2,224 decrease from the day before. Harshita realised that this slump was a unique opportunity to buy, especially because prices had recently crossed ₹1,00,000.

100 grams of 24-carat pure gold was her goal. The price was confirmed by the shopkeeper to be ₹94,294 × 10 = ₹942,940. Making charges were 25%, as anticipated, adding ₹235,735. Only the gold value was subject to 3% GST, which came to ₹28,288. Harshita calculated the numbers in her head:

Total Cost = ₹942,940 (Gold) + ₹235,735 (Making) + ₹28,288 (GST) = ₹1,206,963

Harshita had completed the transaction in less than an hour. She left with jewellery and the satisfaction of a wise investment, having saved ₹1.2 lakh especially for this occasion, and at favourable rates.

Understanding Gold Purity and Its Impact on Pricing

What Is Gold Purity?

Gold purity refers to the proportion of pure gold in an alloy, expressed in two primary ways:

• Karat (K): Measures the parts of gold per 24 parts of the alloy. For example, 24K gold is 100% pure gold, while 18K gold contains 75% gold and 25% other metals.
  
  
• Fineness: Expressed in parts per thousand, indicating the percentage of pure gold. For instance, 999 fine gold is 99.9% pure.

Gold Purity Chart:

Disclaimer:  This data is taken from TOI. 

Impact of Purity on Pricing:

• Higher Purity = Higher Price: Gold with higher purity (e.g., 24K) is more expensive due to the greater amount of pure gold content.
  
  
• Alloyed Gold (Lower Purity): Lower karat gold (e.g., 18K, 14K) is less expensive because it contains a higher percentage of other metals, which are less costly than gold.
  
  
• Market Trends: In India, rising gold prices have led consumers to opt for lower-purity gold to manage costs. For instance, 18K gold is gaining popularity due to its lower price, nearly 20% less than 22-carat, and greater durability.
  
  Read More – How to Buy Digital Gold in 2025 – Step-by-Step Guide for Investors

Hallmarking and Purity Assurance:

In India, the Bureau of Indian Standards (BIS) certifies the purity of gold jewellery through hallmarking. The BIS hallmark includes:

• Purity Grade: Indicating the karat or fineness.
• BIS Logo: The official mark of the Bureau.
• Assaying and Hallmarking Centre's Mark: Identifying the testing centre.
• Year of Marking: Indicating when the jewellery was tested.

This certification ensures that the gold content matches the stated purity, providing consumers with confidence in their purchases.

For example, let’s say you want to buy 100 grams of gold, and you are choosing between two types of gold: 24-carat and 22-carat.

1. Price of 24-Carat Gold:

• The current market rate of 24-carat gold is ₹94,294 per 10 grams.
• So, for 100 grams of 24-carat gold:
   
• 94,294 × 10 = ₹942,940

Since 24-carat gold is pure, it has 99.9% gold content.

2. Price of 22-Carat Gold:

• The rate for 22-carat gold is typically lower due to the alloy content. Let’s assume the market price for 22-carat gold is ₹86,272 per 10 grams (a 10% drop compared to 24-carat gold).
  
  
• For 100 grams of 22-carat gold:
   
•  86,272 × 10 = ₹862,720

22-carat gold contains 91.6% pure gold, meaning the actual gold content in 100 grams of 22-carat gold is:

100 × 0.916 = 91.6 grams of pure gold.

While the price is lower, you’re getting less gold content compared to the 24-carat gold, which gives you 100 grams of pure gold.

3. Cost Comparison:

• 24-carat Gold (100 grams): ₹942,940, giving you 100 grams of pure gold.
• 22-carat Gold (100 grams): ₹862,720, giving you 91.6 grams of pure gold.

So, if you want 100 grams of pure gold, you would have to buy 24-carat gold, which costs ₹942,940, while 22-carat gold, which is ₹80,220 cheaper, gives you only 91.6 grams of pure gold. Therefore, while 22-carat gold is more affordable, 24-carat gold provides you with more value in terms of pure gold content.

This demonstrates how gold purity impacts the pricing and the amount of pure gold you get for your money.

The Formula for Calculating Gold Jewellery Price:

Total Price = (Weight of Gold in grams × Rate per gram) + Making Charges + GST

Breakdown of Components

1. Weight of Gold: This is the actual weight of the gold used in the jewellery.
   
   
2. Rate per Gram: The current market rate for the specific purity of gold (e.g., 22K or 24K).
   
   
3. Making Charges: These are the labour and design costs associated with crafting the jewellery. Typically expressed as a percentage of the gold's value or a fixed amount per gram.
   
   
4. GST (Goods and Services Tax): In India, GST is applicable on the value of the gold and making charges. As of the latest guidelines, the GST rate on gold jewellery is 3% on the total value of the gold content and 18% on making charges.

Let’s calculate the price of a 22K gold bracelet weighing 50 grams:

• Gold Rate: ₹4,500 per gram (22K)
• Weight of Gold: 50 grams
• Making Charges: ₹500 per gram
  
  

Conclusion

The weight of the gold, the market price per gramme, manufacturing fees, and any relevant GST must all be considered when determining the cost of gold jewellery. Applying the following formula:

Also Read - Gold Loan Interest Calculation 2025: A Clear Guide

Total Price = (Weight of Gold × Rate per gram) + Making Charges + GST

The purchasers can readily estimate the price. Additionally, BIS hallmarking is required to confirm the gold's authenticity and purity. A transparent and informed gold purchase is ensured by keeping these factors in mind.

Faqs

What is the difference between 22K and 24K gold?

24K gold is 99.9% pure, while 22K gold contains 91.6% pure gold and is alloyed with other metals for strength.

How are making charges calculated for gold jewellery?

Making charges are typically calculated per gram or as a percentage of the gold value and depend on design complexity.

What is GST on gold jewellery?

GST on gold jewellery is 3% on the value of the gold and 18% on making charges.

What is BIS hallmarking?

BIS hallmarking ensures that the gold jewellery is certified for its purity and meets Indian standards.
 

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