Why Are Gold Prices Falling?
The recent dip in gold prices isn't happening in isolation. It's a response to several global and domestic economic factors. Internationally, expectations of stable or higher interest rates from central banks like the U.S. Federal Reserve make interest-bearing
assets more attractive than gold, which doesn't pay dividends. A strengthening U.S. dollar also makes gold more expensive for holders of other currencies, which can dampen demand and lower prices. Domestically, factors like fluctuations in consumer demand and changes in import duties can also influence the rates you see at your local jeweller. Prices have shown significant volatility in 2026, dropping from earlier peaks.
How Savings Are Calculated
A falling gold rate is welcome news, but the final price on your bill involves more than just the per-gram rate. The total cost of a piece of jewellery is calculated using a standard formula: the price of gold (weight in grams multiplied by the rate), plus making charges, plus Goods and Services Tax (GST). For example, a drop of ₹500 per gram on a 10-gram purchase translates to a direct saving of ₹5,000 on the value of the gold itself. While significant, this is before other costs are added, which can substantially alter the final amount.
Look Beyond the Sticker Price
The single biggest variable after the gold rate is the making charge. This is the fee for the labour and craftsmanship involved in creating the piece. Making charges are not uniform and can range anywhere from 8% to over 25% of the gold's value, depending on the intricacy of the design and whether the item is machine-made or handcrafted. A lower gold rate can sometimes be offset by higher making charges, so it's crucial to ask for a detailed price breakdown. Don't be swayed by a low headline rate without understanding these additional costs.
Understanding GST on Gold
The Goods and Services Tax (GST) is another mandatory component of your jewellery bill. In India, a 3% GST is applied to the value of the gold. Additionally, a separate 5% GST is levied on the making charges. This means you are taxed on both the material and the labour. Always ensure your invoice clearly lists the gold value, making charges, and the respective GST amounts separately. This transparency is not just good practice; it's your right as a consumer.
The Non-Negotiables: Purity and Hallmarking
Regardless of price fluctuations, the purity of your gold is paramount. In India, it is mandatory for jewellers to sell hallmarked gold. The Bureau of Indian Standards (BIS) hallmark certifies the purity of the metal. For 22-karat gold, look for the '22K916' mark, which signifies 91.6% purity. A newer, six-digit alphanumeric Hallmark Unique Identification (HUID) code has also been introduced for greater transparency and traceability. Never compromise on hallmarking, as it guarantees you are getting the purity you are paying for.
Is This the Right Time to Buy?
Trying to perfectly time the market is a difficult game. While a price drop presents a good opportunity, especially for planned purchases like wedding or festive jewellery, it’s wise to avoid panic buying or selling. Experts often suggest a disciplined approach, such as buying in installments to average out the cost over time. The current dip makes it a favourable time for buyers, but focus on your budget and requirements rather than speculating on future price movements. If the purchase is not urgent, you can track prices for a while to make an informed decision, but remember that rates can be volatile.
