When purchasing gold jewelry, the price you see on the tag is significantly different from the "spot price" of gold you see on news channels. Understanding the math behind gold pricing helps you become a savvy buyer and ensures you aren't overcharged for making fees or purity levels.
The Standard Gold Price Formula
The final price of gold jewelry is calculated using the following mathematical logic:
Final Price = (Gold Price per Gram × Weight) + Making Charges + Taxes
Components of the Calculation
Gold Purity (Karat): 24 Karat gold is 99.9% pure, but it is too soft for jewelry. Most ornaments are made of 22K or 18K gold. To find the 22K rate, you take the 24K rate and multiply it by (22/24).
Gold Weight: This is the actual weight of the gold in grams. Be careful that the weight of any stones or gems is subtracted before calculating the gold value.
Making Charges: These are labor costs for designing the jewelry. It can range from 3% to 25% depending on the complexity of the design.
GST/Taxes: In many regions like India, a flat GST (currently 3%) is applied to the sum of the gold value and making charges.
Example Calculation
Suppose the 24K gold rate is 60,000 for 10 grams. You want to buy a 10-gram chain in 22K gold with 10% making charges.
Step
Calculation
Result
1. 24K Price per Gram
60,000 / 10
6,000
2. 22K Price per Gram
6,000 × (22/24)
5,500
3. Actual Gold Value
5,500 × 10g
55,000
4. Making Charges (10%)
55,000 × 0.10
5,500
5. GST (3%)
(55,000 + 5,500) × 0.03
1,815
Final Total
55,000 + 5,500 + 1,815
62,315
24K vs 22K vs 18K: What's the Difference?
The "Karat" (K) denotes the purity of gold. 24K is 100% pure (mathematically 99.9%), while 22K contains 22 parts gold and 2 parts of other metals like copper or zinc to provide strength. 18K gold contains 75% gold and is often used for diamond and gemstone-studded jewelry to provide a more secure setting.
function calculateGoldRate() {
var price24K = parseFloat(document.getElementById('goldPrice24K').value);
var weight = parseFloat(document.getElementById('goldWeight').value);
var karat = parseFloat(document.getElementById('goldPurity').value);
var makingPercent = parseFloat(document.getElementById('makingCharges').value);
var gstPercent = parseFloat(document.getElementById('gstRate').value);
if (isNaN(price24K) || isNaN(weight) || price24K <= 0 || weight <= 0) {
alert("Please enter valid positive numbers for price and weight.");
return;
}
// 1. Get 24K price per 1 gram
var pricePerGram24K = price24K / 10;
// 2. Adjust price based on selected Karat purity
// Formula: (24K price per gram) * (Selected Karat / 24)
var pricePerGramAdjusted = pricePerGram24K * (karat / 24);
// 3. Calculate Base Gold Value
var baseGoldValue = pricePerGramAdjusted * weight;
// 4. Calculate Making Charges
var makingChargesVal = 0;
if (!isNaN(makingPercent)) {
makingChargesVal = baseGoldValue * (makingPercent / 100);
}
// 5. Calculate Total before Tax
var totalBeforeTax = baseGoldValue + makingChargesVal;
// 6. Calculate GST/Tax
var taxVal = 0;
if (!isNaN(gstPercent)) {
taxVal = totalBeforeTax * (gstPercent / 100);
}
// 7. Grand Total
var finalPrice = totalBeforeTax + taxVal;
// Display results
document.getElementById('resBaseValue').innerText = baseGoldValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMakingValue').innerText = makingChargesVal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTaxValue').innerText = taxVal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalValue').innerText = finalPrice.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('goldResult').style.display = 'block';
}