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How is the price of 22 carat gold determined in India?

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Buying gold is a very common phenomenon among Indians. Festivals and wedding celebrations are incomplete without gold. We normally do not haggle the price of gold a lot while buying it from the local jeweller. Instead we should not blindly trust the price asked by the jeweler, because there are many factors that affect the final amount, including making charges, gold price, value of gems etc.

Currently, there is no such standard billing pattern in India and prices differ from jeweller to jeweler.

Here is the most commonly used formula to calculate the final price of gold:

Final price of the jewellery = Price of 22 KT gold X (weight in grams) + Making charges + GST at 3 percent on (price of jewellery + making charges)

Below-mentioned are some factors that you should be aware of while buying gold to avoid being tricked:

  1. Purity of Gold

Gold is always available in different Karats (KT), which is the measure of marking the purity of gold.

24KT gold is considered to be the purest form of gold but it is too fragile to be made into jewellery. Most popular forms of gold available in jewellery is of 22KT which has 91.6 percent gold. Several other metals like copper, zinc, cadmium or silver are added to the gold to make it stronger.

  1. Studded jewellery

Sometimes, people buy jewellery that has stone work on it. Some dishonest jewellers weigh the entire ornament and also charge for the stones in it. And if ever you wish to exchange/sell it back, the jeweler normally deducts the weight of the stone from the total value.

Thus, while buying gold you should be totally aware that the value of gold has to be calculated depending on the weight of the jewellery and reducing the weight of diamonds and gemstones.

Price of gold jewellery depends on

  1. a) gold in the jewellery, i.e. 22KT or 18KT
  2. b) the metal mixed with the gold.

Gold is traded everyday and the demand and supply of the yellow metal determines its price every day. The pure gold rates are usually published in news on every day basis, but the gold rate for different jewellers vary as it depends from whom they are buying gold and at what price. However, the difference is very minute.

  1. BIS Standard hallmark for purity

Hallmarking is the process of certifying the purity of any gold jewellery. A hallmark certification is given by the Bureau of Indian Standards (BIS) and approves of the purity of gold.

BIS imprints its logo as a sign of hallmark along with hallmarking centre mark, fineness number and jeweller’s identification mark.

  1. Making charges

Making charges vary depending on the type of gold jewellery you are buying. This is because every ornament requires different style of cutting and finishing. It also varies on the factor how much fine detailing is needed in a particular design. Machine-made jewellery usually costs less than man-made ones.

Courtesy: Times of India/ Image: Cherishgold.com

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