How the Karachi Saraf Jewellers Association fixes the rate

The Karachi Saraf Jewellers Association fixes the rate for one tola of 24 karat gold, and the other cities' associations follow Karachi's lead. The fix happens once a day, and the rate can hold for the whole day. A jeweller's till total differs from the published rate because making charges, wastage and the buy-back deduction are added on top.

Who fixes the rate

The Karachi Saraf Jewellers Association is the body that fixes the rate for one tola of 24 karat gold. It is a trade association of gold dealers in Karachi, and its rate is the benchmark for the whole country. The other cities' associations follow Karachi's lead, so the Lahore and Islamabad rates are usually the same as Karachi's.

The association does not publish the names of its members or the details of its fixings. A buyer who wants to know the rate should look at the published close, not ask a jeweller. The jeweller is quoting the same rate, plus a margin.

How often a fix happens

The association fixes the rate once a day, and the rate can hold for the whole day. There is no intraday fixing, and the rate does not move every hour. A buyer who sees a different rate in the evening is seeing a different day's fix or a jeweller's margin.

The association does not fix on Sundays, so a Sunday's rate is the same as Saturday's. A Monday morning check will often see a close from Saturday, because Monday's fix may not be out yet. The rate is a daily benchmark, not a live market price.

Why a jeweller's till total differs from the published rate

A jeweller's till total is higher than the published rate because the jeweller adds making charges, wastage and margin on top. Making charges are the fee for shaping the gold, wastage is the gold lost in the making, and margin is the jeweller's profit. These are set by the jeweller, not by the association.

A buyer who is quoted a total price should ask the jeweller to itemise the metal price per tola, the making charge, and the wastage separately. A jeweller who refuses to itemise is hiding the margin, and the buyer should walk away.

The buy-back deduction when gold is sold back

When gold is sold back to a jeweller, the jeweller deducts a margin from the published rate. This deduction is not set by the association; it is the jeweller's spread. A buyer who sells gold back should expect to receive less than the published rate, and the difference is the jeweller's profit.

The buy-back deduction is usually a fixed percentage, but it varies from shop to shop. A seller should ask for the deduction to be stated in rupees per tola, and should compare it to the published rate before selling.

What a buyer should ask to see itemised on a receipt

A buyer should ask for a receipt that itemises the metal price per tola, the making charge, the wastage, and the total. The metal price should be close to the published rate, and the making charge and wastage should be stated separately. A receipt that only gives a total is not enough.

The receipt should also state the karat of the gold and the weight in grams or tolas. A buyer who has an itemised receipt can check the price against the published rate and can prove what was paid if the piece is later sold back.

What the association's fix depends on

The association's fix depends on the world gold price, the rupee, and local demand. The world price is the main input, and the rupee determines the local cost. Local demand can push the rate above or below the world price, but the association's fix is a benchmark, not a forecast.

A buyer who wants to know why the rate moved should look at the world price and the rupee. The association does not publish reasons for its fixes, so a buyer must infer them from the market.