What Is the Difference Between Gold Melt Value and Pawn Value?
Melt value is the value of pure gold content in your jewellery at today's spot price. The formula is simple: Weight (g) × Purity Fraction × 24K Rate/gram.
Pawn value is the amount a pawnbroker, bank, or NBFC will actually disburse as a loan — typically 60–75% of the melt value. The difference is the lender's margin that covers risk of gold price decline, storage, insurance, assaying cost, and their profit.
Banks apply the 75% LTV cap set by RBI, but their internal gold rate is usually 5–15% below market, making the effective pawn value even lower. An unbiased calculator like this one uses the actual market rate, so you can see exactly how much the lender is keeping.
How Do You Calculate the True Melt Value of Your Gold Jewellery?
The melt value formula is: Melt Value = (Total Weight − Stone Weight) × (Karat ÷ 24) × Live 24K Rate per gram
For example, a 10-gram 22K gold chain with no stones at ₹7,500/g 24K rate: 10 × 0.916 × ₹7,500 = ₹68,700.
Key deductions to know: most jewellery has 5–15% non-gold weight (clasps, solder, stones). Making charges you paid at purchase are irrelevant to melt value — they are a sunk cost you never recover. Only the raw metal has melt value. Hallmarked gold with a BIS HUID number provides certified purity, which ensures accurate melt value calculation.
Why Does the Pawn Value Differ From One Lender to Another?
Several factors create variation: LTV ratio (SBI offers up to 75%, local pawnbrokers offer 50–60%), assaying accuracy (XRF machines are precise, acid tests are approximate), and internal gold rate (some banks use rates from the day before or apply a safety margin).
Processing fees, valuation fees, and documentation charges further reduce the net amount you receive. Use our Charges Calculator to see the full fee breakdown.
To get the best deal, compare offers from at least 3 lenders. Walk in knowing your gold's melt value (from this calculator), and don't accept any valuation below 90% of it. Check our Bank Comparison page to see who offers the best rates.