Methodology · Updated April 2026

How Gold Prices Are Calculated

By James Carter, Precious Metals Editor · 26 April 2026

The gold price you see quoted in financial news — "XAU/USD $3,200" — is the spot price: the rate for a 400-troy-ounce bar traded between professional dealers in London or New York. It is not what you pay at a jeweller in Riyadh, a bullion dealer in Mumbai, or a coin shop in London. freshgoldprice.com shows the retail all-in price — what a buyer actually pays, after every cost is added.

Why Retail Gold Costs More Than Spot Price

Between the London spot price and the price tag on a gram of gold in a local jeweller, four costs are layered on top:

1.Currency conversion — spot is priced in USD. A buyer in Egypt, Pakistan, or Turkey pays in their own currency, converted at the live market rate.
2.Import duty — most countries charge a customs tariff when gold crosses the border. India levies 15%, Pakistan approximately 6%, Turkey 0%. These apply before any other markup.
3.VAT or GST — some countries apply sales tax to gold (Australia 10% GST on bullion; UK 20% VAT on silver but 0% on investment gold; Saudi Arabia 15% VAT). This is charged on the duty-inclusive price.
4.Dealer margin — the jeweller or bullion dealer adds a markup to cover operating costs and profit. This ranges from ~2% in competitive Gulf markets to ~8% in markets with fewer dealers.

These costs are compounded (each applies to the already-marked-up price), not additive. That is how real bullion pricing works — and it is why a 15% import duty does not simply add 15% to spot.

The Formula

Retail Price Per Gram (all-in)


            price = (spotUSD/oz ÷ 31.1035) × fxRate × karatRatio

                      × (1 + importDuty)

                      × (1 + VAT)

                      × (1 + dealerMargin)

                      × correctionFactor

Where 31.1035 is the number of grams per troy ounce, and karatRatio = karat / 24 (e.g. 22K = 0.9167). correctionFactor (default 1.0) is a per-country residual adjustment to match observed local retail prices when a market's effective premium diverges from the theoretical compounded markup — common in markets with informal premiums, currency-risk premia, or bundled making charges.

Worked Examples

Using approximate values: XAU/USD spot = $3,200/oz for illustration.

🇸🇦

Saudi Arabia — 21K Gold per Gram (SAR)

Spot: $3,200/oz ÷ 31.1035 g/oz$102.88/g

× FX rate (USD → SAR ≈ 3.75)SAR 385.80/g

× 21K ratio (21 ÷ 24 = 0.875)SAR 337.57/g

× (1 + 0% import duty)SAR 337.57/g

× (1 + 15% VAT)SAR 388.21/g

× (1 + 3% dealer margin)SAR 399.86/g

Saudi Arabia has no import duty on gold but applies 15% VAT to all gold sales.

🇮🇳

India — 22K Gold per Tola (INR)

Spot: $3,200/oz ÷ 31.1035 g/oz$102.88/g

× FX rate (USD → INR ≈ 83.5)INR 8,590/g

× 22K ratio (22 ÷ 24 = 0.9167)INR 7,874/g

× (1 + 15% import duty)INR 9,055/g

× (1 + 3% GST)INR 9,327/g

× (1 + 5% dealer margin)INR 9,793/g

× 11.6638 grams/tolaINR 114,175/tola

India's 15% import duty is the primary driver of the premium over spot. Display unit is tola (11.6638g) — the standard in Indian and South Asian gold markets.

🇬🇧

United Kingdom — 24K Gold per Troy Ounce (GBP)

Spot: $3,200/oz$3,200/oz

× FX rate (USD → GBP ≈ 0.79)GBP 2,528/oz

× 24K ratio (1.0)GBP 2,528/oz

× (1 + 0% import duty)GBP 2,528/oz

× (1 + 0% VAT — investment gold exempt)GBP 2,528/oz

× (1 + 2% dealer margin)GBP 2,579/oz

UK investment gold (≥ 995 fineness bars and specified coins) is VAT-exempt under HMRC rules. UK silver, however, carries 20% VAT. Display unit is troy ounce for the UK.

Import Duties & VAT by Country

The table below shows the key policy rates used in our calculations. All rates are sourced from official government customs schedules and updated when legislation changes.

Country	Import Duty (Gold)	VAT/GST (Gold)	VAT/GST (Silver)
🇸🇦 Saudi Arabia	0%	15%	15%
🇦🇪 UAE	0%	5%	5%
🇪🇬 Egypt	5%	14%	14%
🇮🇳 India	15%	3% GST	3% GST
🇵🇰 Pakistan	~6% (ad valorem equiv.)	0%	0%
🇹🇷 Turkey	0%	0% (bullion)	20%
🇬🇧 United Kingdom	0%	0% (investment gold)	20%
🇩🇪 Germany	0%	0% (investment gold)	19%
🇦🇺 Australia	0%	0% (≥99.5% fine)	10% GST
🇺🇸 United States	0%	0% (bullion)	0% (bullion)
🇯🇵 Japan	0%	10% consumption tax	10%

Rates are approximate. Pakistan uses an ad valorem approximation of a specific customs duty (PKR per 10g), which drifts slightly as gold price moves. For the complete rate list with source citations and effective dates, see data/pricing-config.json in the public GitHub repository.

Frequently Asked Questions

Why is the gold price on your site higher than the spot price I see in the news?: Spot price is the wholesale interbank rate for large bars. Retail buyers pay more because of import duty, local sales tax, and dealer margin on top of that. For Saudi Arabia, for example, 15% VAT alone adds roughly SAR 50–60 per gram at current prices.
How often are prices updated?: Once per day at 00:00 UTC. We fetch XAU/USD and XAG/USD spot from GoldAPI.io, apply the country-specific formula, and cache the result in Cloudflare KV. The 7-day chart on each country page is built from this daily snapshot.
What is a tola? What is a tael?: A tola is a traditional South Asian gold weight equal to 11.6638 grams (originally the weight of a silver rupee). It remains the standard unit for gold trading in India, Pakistan, Nepal, and Bangladesh. A tael is the standard unit in Chinese markets: 37.799 grams (Hong Kong tael). A troy ounce — the global spot standard — is 31.1035 grams, distinct from the avoirdupois ounce (28.3495g) used for everyday goods.
What does 21K, 22K, 24K mean?: Karat (K) describes the proportion of pure gold in an alloy. 24K is 100% pure gold (99.9%+ fineness). 22K is 22/24 = 91.7% gold. 21K is 87.5% gold — the dominant jewellery standard across Gulf countries. 18K is 75% gold — common in European jewellery. 14K is 58.3% — common in the US for jewellery.

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