How Gold Prices Are Determined: From International Markets to Local Jewellers

Gold prices in India are influenced by a chain of global and domestic factors. Understanding this chain helps consumers and jewellers make more informed decisions.

International Price Setting

The global gold price is established through two primary mechanisms:

• LBMA Gold Price — set twice daily in London by the London Bullion Market Association, this is the primary global benchmark
• COMEX — the commodities exchange in New York where gold futures are actively traded

Key factors affecting the international price include geopolitical events, central bank monetary policy (especially the US Federal Reserve), inflation data, US dollar strength, and investor sentiment.

From International to Indian Prices

The Indian Bullion and Jewellers Association (IBJA) sets daily gold prices domestically. IBJA consults the ten largest gold dealers in India, collects buy/sell quotes, averages them, and adjusts for local market conditions.

The Layers of Retail Pricing

The price you pay at a jewellery store includes multiple layers:

1. International gold price — the base
2. Currency conversion — gold is priced in USD internationally; INR/USD exchange rate affects domestic prices
3. Import duty — India reduced customs duty on gold from 15% to 6% in 2024, the steepest reduction on record
4. GST — currently 3% on gold
5. Making charges — typically 5% to 25% depending on the design complexity and craftsmanship
6. Jeweller's margin — the retail markup

Why Prices Vary Between Jewellers

The international gold price and import duty are the same for all. The variation comes primarily from making charges and the jeweller's margin. Simpler designs have lower making charges; intricate or branded designs command higher premiums.

India's Gold Market in Numbers

India consumed 802.8 tonnes of gold in 2024 worth Rs. 5.15 lakh crore. In 2025, volume declined to 710.9 tonnes due to record-high prices, but the value increased 30% to Rs. 7.51 lakh crore. Bar and coin investment surged 60% in 2024, making India the second-largest bar and coin market globally.

What This Means for Buyers

Gold prices fluctuate daily based on global and domestic factors. When making a purchase, focus on verifiable purity (BIS hallmark with HUID) and transparent pricing (itemised invoice showing gold weight, purity, making charges, and taxes) rather than trying to time the market.