The number flashed on the news every morning — "gold at ₹X per 10 grams" — isn't set by any single authority with a stamp. It's the end result of five layers stacked on top of each other, most of which have nothing to do with India at all. Here's the full chain, in order.
Everything starts on the global bullion market — mainly the London Bullion Market (LBMA) and COMEX in New York — where gold and silver trade in US dollars per troy ounce, around the clock. This is the true starting price, and it moves on factors that have nothing to do with Indian demand: US Federal Reserve interest rate decisions, US dollar strength, inflation expectations, central bank buying (several countries have been steadily adding gold to reserves), and geopolitical risk. Silver moves on the same forces plus one extra: industrial demand from electronics and solar panel manufacturing, which can pull it in a different direction from gold on any given day.
India doesn't mine meaningful quantities of gold or silver — it imports almost all of it. So the dollar spot price gets converted to rupees at the prevailing USD/INR exchange rate before it becomes an Indian number at all. This step matters more than most buyers realise: if the rupee weakens against the dollar even while the dollar gold price stays flat, the landed cost in India still goes up. A weak rupee and a rising gold price often move together, which is part of why gold is sometimes called a currency hedge.
The converted rupee price then absorbs India's import duty — currently 15% (a 10% basic customs duty plus a 5% agriculture infrastructure cess, hiked from 6% in May 2026 to help defend the rupee). This isn't optional or negotiable per transaction; it's applied at the point of import and is already inside every "landed cost" figure by the time a bullion dealer sees it.
This is the step most people skip past. Once bullion lands in India, national and city-level trade bodies — most notably the India Bullion and Jewellers Association (IBJA) — publish a daily reference rate each morning, based on the landed cost of that day. Local jewellers' associations in individual cities then set their own quoted rate off this benchmark, adjusted slightly for local transport costs and demand. This is the actual mechanism behind the "today's gold rate in [city]" figures you see — it's a published benchmark, not a live tick-by-tick market price the way a stock is. It's typically updated once or twice a day, not continuously.
Everything above produces the wholesale/benchmark rate. What you're actually billed adds two more things on top: making charges (the jeweller's labour and design margin, which is genuinely negotiable and varies store to store — see our making charges guide) and 3% GST on the combined value (see our full GST breakdown). Coins and bars skip most of the making-charge layer since there's little labour involved, which is one reason they track the benchmark rate more closely than jewellery does.
Silver runs through the exact same five layers, but with an extra variable at Layer 1: industrial demand. Because a large share of global silver output is consumed by electronics and solar manufacturing rather than held as jewellery or investment, silver prices can swing on industrial-sector news that has zero relevance to gold. Combined with tighter physical supply recently, silver has been trading at an even larger premium over its historical relationship with gold — worth knowing if you're comparing the two. Our guide to investing in silver covers this ratio in more depth.
This article is for general informational and educational purposes only and does not constitute financial or investment advice. Duty and tax rates are set by the Indian government and can change — verify current rates independently before making a purchase or investment decision.
Spot vs retail price, explained simply.
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