Gold jewellery price: Know how cost of your gold jewellery is calculated by jewelers
Tue Oct 22 2024
Many people prefer to buy gold jewellery around Diwali. It is considered auspicious to buy gold on Dhanteras, which kicks off the Diwali celebrations. Many Hindus believe that buying gold on Dhanteras invites Goddess Lakshmi to their homes, and this brings wealth, prosperity and good fortune.
Recently, gold prices crossed Rs 77,000 per 10 grams (24KT gold). According to
analysts, gold prices may see new highs in the coming years due to rising
geopolitical tensions.
Buying gold jewellery is expensive. It is important to understand how a jeweller calculates the amount you pay while buying gold jewellery. The price you pay for buying gold jewellery depends on various factors.
Why do gold prices vary from jeweller to jeweller?
You must have noticed that jewellers don't charge a uniform price for gold.
There are multiple reasons why gold prices vary from one jeweller to another.
One reason is that different jewellers acquire gold at different prices.
Then there are other expenses, such as refining and transportation costs. The price of gold also varies due to differences in purity of gold.
Gold jewellery price calculation formula
To calculate the price of gold jewellery, jewellers use this formula:
Gold jewellery final price = {Price of gold X (Weight in grams)} + Making
charges + GST at 3%+ Hallmarking charges
Here is an example to understand this. Suppose you buy a gold bangle of 22KT
weighing 15.76 grams. Assume the price of 22KT is Rs 70,000 per 10 grams and
the making charges are calculated at 15%.
Here is how jewellers calculate the price of the gold bangle:
|
Particulars |
Amount |
|
Price of 10 grams 22KT gold |
Rs 70,000 |
|
Price of 1 gram 22 KT gold |
Rs 7,000 |
|
Price of 15.76 gram gold bangle |
Rs 1,10,320 |
|
Making charges at 15% |
Rs 16,548 (15% of Rs 1,10,320) |
|
Total price of gold bangle |
Rs 1,26,868 |
|
GST on the gold bangle |
Rs 3,806 |
|
Price of gold bangle with GST |
Rs 1,30,674 |
|
Hallmarking charges |
Rs 45 |
|
Final price of gold bangle to be paid by you |
Rs 1,30,719 |
Other factors to keep in mind
While buying gold jewellery, there are other things that you must know.
Gold price depends on purity of gold
The price of gold depends on its purity. Gold is available in various purity levels in the market: 24KT, 23KT, 22KT, 20KT, 18KT and 14KT. There is a positive correlation between the price of gold and the purity of gold. As
purity goes up, the price goes up.
24KT gold is the most expensive one. However, you cannot usually buy gold
jewellery made of 24KT gold. This is because 24KT gold is not hard enough to
make jewellery. You can buy gold bars, gold coins, etc of 24KT
gold.
On the other hand, you can buy gold jewellery of 23KT, 22KT, 20KT, 18KT and
14KT where alloys and other metals are added to 24KT gold to increase its
hardness or strength.
Making charges: Percentage or per gram basis
Gold jewellers also levy making charges on jewellery. This can be done in two ways: on a per-gram basis or a percentage basis.
1. Per-gram basis charge: Jewellers may advertise making charges
on gold jewellery as Rs 899 per gram or Rs 500 per gram or Rs 999
per gram. These making charges are called "making charges on per-gram
basis".
Here is an example of how your jeweller can levy making charges on a per-gram
basis. Suppose your jeweller is charging Rs 499 per gram as making charges, and
you buy a gold bracelet of 12 grams. The jeweller will
charge Rs 5,988 (Rs 499 X 12 grams) as the making charge.
2. On percentage basis: A jeweller can also levy making charges on a
percentage basis. Usually, it is in the range of 10% to 25%.
Here is an example of how a jeweller calculates making charges on a percentage
basis. Suppose you buy a 22 KT gold bangle of 12 grams and the cost of 22KT
gold is Rs 70,000 per 10 grams. The price of a bangle becomes Rs 84,000 (12
grams X 70,000). If the jeweller is quoting 15% as making charges on this gold
bangle, that would come to Rs 12,600 (15% of Rs 84,000).
3. Mix of per-gram and percentage basis: Some jewellers have started
quoting making charges by linking it to a percentage of the prevailing gold
price and then charging on a per-gram basis.
Here is an example: Suppose the price of 22 KT gold is Rs 70,000 per 10 grams.
Making charges will be 1% of the prevailing gold price per gram. This will be
equivalent to Rs 700 per gram. If you buy a gold chain of 10
grams, the making charge will be Rs 7,000 (Rs 700 per gram X 10 grams gold chain).
Remember, goods and services tax will be levied on the total cost of gold
jewellery, which includes making charges.
Diamond jewellery or gemstone jewellery
If you are buying gold jewellery with diamonds or gemstones embedded, ensure that the precious stone and gold are weighed separately while calculating the cost of the jewellery. Some unscrupulous jewellers calculate
the price of such a jewellery piece by weighing it (gold and diamond/gemstone together) and then charging gold price on that measure, instead of weighing the stone and gold separately.
However, when you want to sell or exchange this gold jewellery, only the value
of the gold will be considered. The stone's weight will be deducted from the
total weight of the jewellery to arrive at the gold's weight.
Hallmarking of gold jewellery
Hallmarking of gold jewellery is mandatory from June 16, 2021, as per consumer laws. It protects consumers by ensuring that the purity of gold is guaranteed, quality standards are maintained, and the risk of fraud is
reduced.
Hallmarking signs are embossed on the gold jewellery. You must check the
following three signs on gold jewellery to ensure it is hallmarked:
a) BIS logo - It is a logo of the Bureau of Indian Standard (BIS) and is
triangular with a dot in the centre.
b) Purity/fineness - Gold jewellery with a sign "22K916" means
it is 22KT gold or has 91.6% gold in it. Similarly, gold jewellery with a sign
"18K750" represents it has 75% gold.
c) HUID Code - This is a 6-digit alphanumeric code that is unique for
every piece of gold jewellery. The HUID Code can be verified on the BIS app.
|
Gold purity in jewellery |
Gold % in jewellery |
Fineness number |
|
22KT |
Contains 91.6% gold |
22K916 |
|
18KT |
Contains 75% gold |
18K750 |
|
14KT |
Contains 58.5% gold |
14K585 |
A gold jeweller will levy certain charges for getting gold jewellery hallmarked. A jeweller can charge Rs 45 for each piece. The hallmarking charges are flat charges irrespective of the weight of the gold jewellery.
Exchange and sale policies of jeweller
Many customers exchange old gold jewellery with new to keep up with the latest style and trends. However, it is vital to understand jewellers' exchange and sale policies.
These days, many jewellers offer 100% of gold value during an exchange but only
85%-90% of gold value when the piece is sold for cash.
Source: https://economictimes.indiatimes.com/