Many Indians are surprised to learn that gold can become more expensive in India even when the international gold price hasn't changed. The reason is the rupee-dollar exchange rate. Here's exactly how it works.
Gold is priced globally in US dollars per troy ounce (1 troy ounce = 31.1035 grams). To convert this to Indian rupees per 10 grams, here is the formula:
Let's say gold is trading at $4,500 per ounce internationally and the rupee is at ₹85/dollar. India's gold rate works out to approximately ₹1,36,000 per 10 grams.
Now suppose the rupee weakens by just ₹1 — moving from ₹85 to ₹86 per dollar, while the international gold price stays the same at $4,500. The new Indian gold rate becomes approximately ₹1,37,600 per 10 grams — an increase of ₹1,600 purely because of currency movement. Every ₹1 rupee depreciation adds roughly ₹500-700 to the 10 gram gold price.
The combination of rising international gold prices AND a weakening rupee creates a double impact on Indian gold rates. In 2025-26, both forces worked together — international gold rose from $2,000 to $4,500 per ounce while the rupee weakened from ₹83 to ₹87+ per dollar. This double effect pushed Indian gold rates up much more than the international rise alone would suggest.