How the gold rate in India is set, and how to read it

The gold rate in India is built from four things: the international price of gold in US dollars per troy ounce, the US dollar to rupee exchange rate, the import duty and related levies set by the Government of India, and the local premium or discount in the Indian market. Jewellers then quote it per 10 grams for 24KT and 22KT gold, and 3% GST is added on the price of the jewellery. That is why the rate in a newspaper, the rate at a jeweller and the international "spot" price never quite match.

This guide explains each step in plain numbers, so you can read any gold rate, including ours on shiforaa.in, and know what lies behind it.

Step 1: the world price, in dollars per ounce

Gold is traded around the world almost around the clock, and its benchmark price is quoted in US dollars per troy ounce. A troy ounce is 31.1035 grams, a little heavier than the ordinary ounce.

This price moves through the day with global demand, interest rates, the strength of the dollar and the news. It is the same number whether you are in Mumbai, Dubai or London, and it is the starting point for every gold rate in India.

Step 2: from ounces to grams, and from dollars to rupees

To turn the world price into an Indian rate:

1. Divide the price per ounce by 31.1035 to get the price of one gram of pure gold in dollars.
2. Multiply by the US dollar to rupee exchange rate.
3. Multiply by 10 for the rate per 10 grams, the unit most Indian jewellers use.

An illustrative example, not today's rate: if gold is at $4,000 an ounce and one dollar buys ₹95, one gram of pure gold is worth about $128.60, or about ₹12,217. Ten grams are worth about ₹1,22,173, before any duty or tax.

This also shows why the rupee matters as much as gold. If the world price stays still but the rupee weakens against the dollar, the gold rate in India rises.

Step 3: import duty and levies

India imports most of the gold it uses, and imported gold pays customs duty and related levies. These are set by the Government of India, often announced in the Union Budget, and they change from time to time. Because duty is charged on the imported metal, it lifts the Indian price above the converted world price.

On top of duty, the Indian market carries its own premium or discount. When demand is strong, for instance before festivals and the wedding season, dealers may charge a premium over the landed cost; in quieter months the market can trade at a discount. Banks and bullion dealers also add their own margins. Together these explain most of the gap between the converted spot price and the rate you see quoted locally.

Step 4: 24KT, 22KT and 18KT rates

Rates are quoted by purity, because a jewel is never pure gold alone. The karat tells you how much of the metal is gold:

• 24KT (999) is 99.9% gold, used for coins and bars, too soft for most jewellery.
• 22KT (916) is 91.6% gold, the classic purity of Indian jewellery.
• 18KT (750) is 75% gold, used for diamond and gem-set pieces because it holds stones firmly.
• 14KT (585) is 58.5% gold, hard-wearing and lighter on the budget.

Each rate is the pure-gold rate multiplied by its purity. Using the same illustrative figures as above, the rate per 10 g would be about ₹1,22,051 for 24KT, ₹1,11,910 for 22KT and ₹91,630 for 18KT, before duty, premium and GST. Our guide to 18KT, 22KT and 14KT gold explains how to choose between them.

Step 5: GST on gold jewellery

Gold jewellery bought in India carries 3% GST on its value. On a 22KT piece with ₹1,11,910 of gold in it, that is about ₹3,357 more. A reputable jeweller shows GST clearly on a GST invoice, with their GSTIN.

The rates you read in newspapers and on most websites are usually quoted before GST, so the price of a finished piece is always higher than the rate multiplied by the weight.

Why a jeweller's rate differs from the spot rate

When you compare a jeweller's rate per 10 g with the international price, the gap comes from the steps above, plus a few practical things:

• Timing. The world price and the rupee both move during the day. A rate printed in the morning may be out of date by the afternoon.
• City and association rates. Many jewellers follow a daily rate published by their local trade association, which reflects local supply and demand.
• Buying versus selling. The rate at which a jeweller sells gold is higher than the rate at which they buy old gold back.
• The jeweller's own margin. Some include a premium in the rate itself; others show it separately.

None of this is a trick, as long as it is shown. The trouble starts only when the numbers are hidden.

Making charges and the price of a finished piece

The gold rate is only the price of the metal. A finished jewel also includes:

• Making charges, which pay for the craftsmanship: casting, filing, setting and polishing. They may be quoted per gram, as a percentage of the metal value or as a fixed amount for intricate work such as kundan.
• Wastage, on some pieces, a stated allowance for the metal genuinely lost in making.
• Stones, priced separately by size and quality.
• GST, at 3% on the jewellery.

So a 12 g chain in 22KT gold costs 12 g multiplied by the 22KT rate per gram, plus its making charge and any wastage, plus GST. Comparing jewellers on the gold rate alone tells you only part of the story; compare the whole price breakup.

How shiforaa.in shows the gold rate

On our India store, every number comes from the same chain of steps, shown openly:

• Our live rates page shows gold, platinum and silver per gram and per 10 grams in rupees, by purity: 24KT, 22KT, 18KT and 14KT gold, platinum 950 and silver. It states the US dollar to rupee rate we are using, and the rates are shown before GST.
• Every product price on shiforaa.in includes 3% GST, so the price you see is the price you pay, with a GST invoice.
• Each product page has a price breakup: net and gross weight, the rate per gram for your chosen purity, the metal value, the making charge, any stones and GST.
• The rate refreshes through the day. The moment you place your order, your price is locked, whatever the market does next.

For clients outside India, shiforaa.com shows the same rates in US dollars per gram and per ounce. Our guide to how our live pricing works walks through every line of a price.

In brief

What decides the gold rate in India? The international price of gold in US dollars per troy ounce, the dollar to rupee exchange rate, import duty and levies set by the Government of India, and the local market premium or discount.

Why is gold quoted per 10 grams in India? It is the trade's long-standing unit. A rate per 10 g is simply the rate per gram multiplied by ten; our rates page shows both.

How much GST is charged on gold jewellery? 3% on the value of the jewellery. Prices on shiforaa.in include it, and the rates on our rates page are shown before GST.

Why is the 22KT rate lower than the 24KT rate? Because 22KT is 91.6% gold and 24KT is 99.9%. The 22KT rate is the pure-gold rate multiplied by 0.916.

Is the gold rate the price of the jewellery? No. The rate is the value of the metal only. Making charges, any stones and GST are added. Ask us anything on our FAQ or write to us.

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