How are Gold Rates Determined?
In India, the daily gold rate is heavily influenced by international gold prices (quoted in US dollars per troy ounce). Because India imports the vast majority of its gold, the USD-INR exchange rate plays a massive role. If the Rupee depreciates against the Dollar, gold becomes more expensive in India even if international prices remain flat. Furthermore, import duties set by the central government directly impact the landing cost of gold.
24K vs 22K vs 18K Gold
- 24 Karat (99.9% Pure): The purest form of gold available. It is bright yellow but extremely soft. It is used primarily for investment purposes in the form of gold coins, bars, and biscuits.
- 22 Karat (91.6% Pure): Commonly known as standard gold or "916 gold." It consists of 91.6% gold and 8.4% alloying metals like copper or zinc. The added metals provide the necessary strength for crafting intricate jewellery.
- 18 Karat (75.0% Pure): Contains 75% gold and 25% alloys. It is much harder and more durable, making it ideal for stone-studded jewellery and daily-wear ornaments like rings and watches.
Understanding Tola
A "Tola" is a traditional South Asian unit of mass, heavily used in the bullion market. 1 Tola is equal to exactly 11.6638038 grams (often rounded to 11.66g or 11.7g by local jewellers). While the metric system (grams) is the official standard, many older investors and traditional jewellers still quote prices per tola.
Taxes and Making Charges
When you purchase physical gold in India, the price you pay includes the base price of gold, the jeweller's "making charges" (which can range from 8% to 25% depending on the design's complexity), and GST. A 3% GST is levied on the total value of the gold, and an additional 5% GST is applied to the making charges.