Undying love that India has for gold stems from century old traditions and religious beliefs. Besides being auspicious, the yellow metal in the form of ornaments is also a great investment option that appreciates in value over time. You may get gold ETFs and bonds at same price across same platform throughout India; but, you will not get gold ornaments at the same price across nation. This is because there is no standard rule for pricing and invoicing gold ornaments through the country. Usually every city has its own gold jewellers association which declares gold rates every morning. Therefore, the prices differ in each town. So how do jewellers fix gold jewellery rates? Let’s find out.
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How Jewellers Calculate Gold Jewellery Rates?
Usually gold jewellery prices are determined on the basis of various factors such as prevailing gold rates as per purity, making charges, weight of gold and GST (Goods and Services Tax). The formula that most jewellery shops use to calculate gold jewellery rates is:
Final Gold Jewellery Price = Gold Rate x Weight of Gold (gms) + Making Charges + GST (Jewellery Price + Making Charges)
To understand the given formula better, let’s take an example:
Suppose a jeweller quotes Rs 28,500 for 10g of 22K gold. Now if you want to buy a gold ring of 9.5g, the price will be calculated as:
Price of 1 gram of gold = Rs. 28,500/10 = Rs 2,850
Price of 9.50 g gold ring = Rs 2,850*9.50 grams = Rs 27,075
Making Charges = 14% of (Rs 27,075) = Rs 3790.5
GST = 3% of 30865.5 = Rs 925.965
The final billing amount will be Rs 31791.465
Things to Remember When Buying Gold Jewellery
- The price of gold depends on its quality and location.
Gold price that jewellers usually quote depends on its quality and location from where you are buying gold ornaments. Let’s first understand how the price of gold varies in terms of quality. Gold is available in different quality grades starting from 9K to 24K. Higher the karats, better will be the quality of jewellery and costlier will be its price. For instance, if the price of a 24K gold is Rs 30K/10g, then 22K gold will be priced lower, which can be somewhere around Rs 27,700 to Rs 28500/10g. As said earlier, gold rate also depends on the location, i.e., the city from where you’re buying gold jewellery. For instance, if gold rate of 24K gold in Kolkata is Rs 32,345, then the gold rate of 24K gold in Kerala might be Rs 30,525. Hence, before going to shop for gold jewellery check the price of gold according to the location and quality.
- Pricing of studded jewellery slightly differs.
Gold jewelries are available in different designs. Some even have artificial diamonds or semi-precious stones embedded in them. At times when you buy such jewelries some jewellers consider the weight of the entire jewellery as the weight of the gold and charge for it at the prevailing gold rate. Make sure that your jeweller calculates the price of gold and studded stones separately otherwise you will be at loss. For instance, if the weight of gold (Rs 2000/g) Even when you exchange or encash studded gold jewellery, your jeweller deducts the stone weight and impurity from the total value.
- Making charges constitute a substantial portion of your total bill.
Besides gold rates, buyers must also take making charges as an important consideration as it makes up a large portion of your total bill. It usually ranges from 6% to 14% of the price of gold used in the jewellery and may go higher depending upon the jeweller. Some jewellers include these charges at a fixed rate per gram of gold, whereas some may levy a specific percentage of the total weight of the jewellery.If you are keen on saving money, you must try to buy gold jewellery from jewellers that levy low making charges. If you manage to bag such a deal, it can give you an advantage at the time of exchanging old jewellery with a new one – the loss of money on the exchange will be less. On the contrary, if you buy gold jewellery at high making charges then it is advisable to buy a new one than exchange your old one.
- Buy only standardized jewellery.
When you go to shop for gold jewellery, you will find non-standardised and standardised gold ornaments in the market. Non-standardised gold ornaments don’t assure customers on the purity of its gold content. On the other hand, gold ornaments that are standardised as per Bureau of Indian Standards (BIS) certify the purity of gold. Although BIS marked gold jewellery is sold at little premium, however, you can exchange it anytime at any jeweller’s shop at little loss in terms of quality margin.
- Invest in pure gold instead of studded one.
Besides being a fashion statement, gold jewellery is also great for investment purposes. If you too are buying gold ornaments with intent of long-term investment, then buy gold jewellery of high purity and BIS mark. In addition to this, avoid stone-embedded jewelries as the price of studded stones is not going to give you any returns.