The price of gold jewelry is determined by several factors:
Understanding the dynamics of gold prices and jewelery prices in India is important for making informed buying decisions. Making charges on gold jewelery is an important component of the final cost you pay when buying gold jewellery. These charges can vary widely depending on factors such as design, workmanship and retailer policies.
Elements of Jewelery Pricing
The price of gold jewelry is determined by several factors:
Weight of Gold:
Gold is measured in grams, and its price changes daily based on market rates.
Purity of Gold:
The purity of gold is indicated in karats (K). General Purity:
- 24K (99.9% pure): Used for investment, not jewelry.
- 22K (91.6% pure): Standard for most jewelry.
- 18K (75% pure): Used in intricate designs and gem studded jewellery.
Making Charges:
Additional cost for making jewelery (percentage-based or fixed per gram).
GST (Goods and Services Tax):
3% on total jewelery cost including making charges.
How is the price of gold determined?
Gold price in India depends on:
International Market Trends:
Influenced by global demand, currency fluctuations and geopolitical events.
Indian Rupee Vs. US Dollar Exchange Rate:
A weaker rupee pushes up gold prices as gold is imported in USD.
Customs Duty:
India imposes import duty on gold
Local Market Factors:
Seasonal demand during festivals, weddings and special occasions affects prices.
Spot Price Vs. retail price
Spot Price:
The current market price of pure gold is usually per gram.
Retail Price:
Includes spot price + making charges + GST.
Making charges?
Making charges refer to the cost of converting raw gold into jewellery. This includes the craftsmanship, labor and equipment involved in making the final piece.
Types of making charges
Percentage-based:
Retailers often calculate the making charge as a percentage of the value of the gold. For example, if a piece of gold costs Rs. 50,000 and the making charge is 10%, then you have to pay an additional Rs. 5,000 has to be paid.
Charges per gram:
Some jewelers charge a fixed rate per gram of gold, e.g. 300/ gram. This is common for lightweight or mass-produced jewelry.
Factors Influencing Charge Formation
Design Complexity:
Complex and detailed designs require more labor and time, resulting in higher charges.
Craft Vs. Machine-made:
Handmade jewelery has a higher making charge due to the skill and effort of the craftsman. Machine-made jewelry is often cheaper.
Type of Jewelry:
Items like bracelets or necklaces, which are complicated, usually have a higher making charge than simple items like rings or earrings.
Brand and Store:
Established or luxury brands often charge premium rates compared to local jewelers.
Negotiation on making charges
Many jewelers allow a bit of negotiation to make up the charges especially during the festive season, wedding season or during promotional offers.
Hallmarking and transparency
Hallmark Gold:
Always ensure that the gold is BIS-hallmarked to guarantee purity. Charging is separate from this certificate.
Transparency:
Reputable jewelers provide detailed bills, separating the gold value, making charges and GST (Goods and Services Tax).
Making charges discount
Festive discounts:
During festivals like Akshay Tritiya or Diwali, jewelers often offer discounts or waive off making charges.
Membership Programs:
Some jewelry brands offer loyalty programs or advance purchase schemes that reduce or eliminate making charges for members.
GST on making charges
The making charges are subject to 3% GST in addition to the 3% GST levied on the price of gold.
How to save on making charges?
Compare Stores:
Visit multiple jewelers to compare the making charges.
Buy Gold Coins:
There are no minting charges on gold coins, but you will need to pay for their purity certificate.
Opt for a simple design:
Choose jewelery with minimal designs to reduce the making charges.
Options to reduce costs
Pre-loved Jewelry:
Consider buying pre-owned jewellery, where making charges may not apply.
Digital Gold or Gold ETF:
If you’re investing in gold rather than buying jewellery, look for options like digital gold, gold ETFs or sovereign gold bonds, which avoid charges altogether.