Steps to Calculate the Gold Price for Jewellery

Being one of the top most precious metals around the globe, there is no denying the fact that most of us would not mind splurging on gold. However, there’s more to know about the costs when buying gold jewellery so that customers can weigh the various parts of the total price. Only a few people actually ask the jeweller about how he has calculated the gold price for the jewellery they buy and the rest of us just have a look at the final bill to know how much we need to pay. But, now as the gold prices are fluctuating, we should know every step to calculate the gold price for jewellery.

Gold Purity

Gold purity is measured in what is referred to as karats (K) and depicts the proportion of gold in the jewellery.

• 24K: 99.99% though chemically it is very soft to be used in jewelleries.
• 22K: Dominantly employed in ornaments produced in India, it is the sum of 91. 67% pure gold.
• 18K: Mainly used in making diamond-studded rings, it has and has 75% pure gold and the remaining is the alloy.
• 14K: It is made out of 58% gold and 42% alloy to make it strong and pocket-friendly for those who wish to buy gold jewelleries.

Gold Weight

Usually, the weight of gold is measured in grams. When you are weighing jewellery, the weight being advised by the jeweller is normally the total weight of the piece of jewellery thus may involve gold and other metals which are used in the strengthening of the jewellery.

Gold Rate

In the case of gold, the rates vary daily and are most often provided per gram or 10 grams because of market trends. That rate is used to estimate the value of gold in jewellery that you want to buy.

Making Charges

Costs of making charges are the cost of the human labour that goes into the making of the jewellery. They depend on the design that is to be made and they can either be a cost per gram or a proportion of the gold.

GST (Gold, Ship, And Tours Tax)

The Government of India charges an effective GST of 3% on the total value of the gold jewellery including the making charges and the cost of gold.

Other Charges

Other expenses, for instance, hallmark charges (the process of certifying the fineness of gold) may also be charged to the consumer.

Calculation Steps

Now that you know the components, let's go through the step-by-step process of calculating the price of gold jewellery.

1. Determine the Gold Weight

After you choose a particular jewellery piece, the jeweller will let you know about the exact weight of that piece and also provide you details like if it’s studded with precious gemstones like diamonds, or rubies or if there is another metal used alongside gold.

2. Estimate the Pure Gold Weight

The next thing is to determine the exact pure gold weight i.e. if you are buying 22K gold jewellery weighing 10 grams, the pure gold weight would be calculated as - (22/24) ×10 grams = 9.167 grams of pure gold.

3. Calculate the Gold Value

When you know the exact weight of gold you want to buy, it’s easy to calculate the value. You have to check the current market gold rate per gram. You can take the example like, if the gold rate is Rs. 5,000 per gram, the gold value would be: 9.167 grams× Rs. 5,000/gram= Rs. 45,835.  

4. Calculate Making Charges

Gold Delicate Pearl Diamond Earrings

The amount you calculated in the above step is the exact value of the gold used in designing the jewellery piece. Now, you have to include the making charges which is the money we pay for the labour used while making the gold jewellery. But the point of difference is that different jewellers offer different making charges on gold which means you have to first confirm the making charge percentage. We can take the example - If the making charge is 15%, the cost would be:
Rs 45,835×15% = Rs. 6,875.25.

5. Calculate GST

GST - Good & Service Tax – it is applied to the sum of the gold value and making charges. With the current GST rate of 3%, you would calculate it as:
(Rs 45,835 + Rs 6,875.25) × 3% = Rs. 1,563.27

6. Calculate the final Price

For example, to calculate the final price, you have to sum up all the charges and the exact value of the gold that has been used to make the jewellery. So, to formulate all this, we can conclude with - Sum up the gold value  + making charges + GST = Rs 45,835+Rs 6,875.25+Rs 1,563.27=Rs. 54,273.52.

Explore the True Value of Gold Jewellery with GIVA

Now that you understand the breakdown of gold jewellery pricing to make it easy to make informed purchasing decisions. You can check their detailed invoice listing the weight, purity, making charges, and taxes. This ensures transparency and provides you with the knowledge to evaluate whether you're getting a fair deal. GIVA believes that openness and trust are important because they make every purchase worth the value and effort.