Gold Price Remains Steady in Kerala; Here is Why Jewellery Costs More Than the Market Rate

In Kerala, the price of gold has remained steady at Rs 112,960 for a sovereign (8 grams) today, maintaining the same rate as yesterday evening. While the price briefly dipped to Rs 112,160 yesterday morning, it recovered to reach the current level by the evening, a rate that persists in jewellery trade today. However, it is important to note that the final cost for customers purchasing gold jewellery will be significantly higher than this base rate.

Jewellery stores typically display the per-gram and per-sovereign price for 22-carat gold, which reflects only the raw gold value. When purchasing finished ornaments, additional costs are mandatory. These include “making charges” (the fee for crafting the jewellery), which vary based on the complexity of the design.

While 24-carat gold bars and coins attract lower making charges, 22-carat jewellery typically incurs a minimum making charge of 5 percent. Depending on the intricacy of the piece, these charges can range from 8 percent to 20 percent. Additionally, a 3 percent Goods and Services Tax (GST) is applied to the total sum of the gold price and making charges, along with smaller charges for hallmarking.

For instance, with the base price of a sovereign at Rs 112,960, a modest piece with a 5 percent making charge would add at least Rs 5,648, followed by a 3 percent GST of Rs 3,558, excluding hallmarking fees. Consequently, the actual price paid by a consumer is notably higher than the market rate for the gold itself.

Experts also warn that while these costs are added during the purchase, they are effectively lost when the ornament is sold back to a jeweller. Customers rarely recover the full making charges or taxes when reselling jewellery, as they are often paid only a fraction of the prevailing market price for the gold. Understanding these components is crucial for consumers planning to invest in or purchase gold jewellery.