It starts with the international spot price
Gold trades continuously against the US dollar, quoted per troy ounce (31.1035 grams). London sets the deepest over-the-counter benchmark, COMEX in New York sets the most-watched futures contract, and Asian hours carry the flow in between. There is no moment in a working week when gold does not have a price.
Anything that moves the dollar price — real interest rates, central bank buying, inflation expectations, geopolitical stress, ETF flows — moves the Indian rate within minutes, because Indian dealers hedge against those same contracts.
Then the rupee converts it
The dollar price is converted at the prevailing USD/INR rate. This is the layer buyers most often miss: the Indian rate can rise on a day when the international gold price fell, simply because the rupee weakened more than gold declined.
Over long periods, rupee depreciation has contributed meaningfully to gold's returns for Indian holders. It is also why comparing an Indian rate chart directly with a dollar chart will confuse you unless you account for the currency.
Import duty and cess are added
India imports the overwhelming majority of the gold it consumes. Basic customs duty, agriculture infrastructure and development cess, and IGST on import are applied to the landed value. When duty is changed in a Budget or by notification, retail rates reprice the same day.
Duty is also the lever that determines how large the unofficial market premium is. Lower duty narrows the gap between the official rate and grey-market supply; higher duty widens it.
Refining, assaying and logistics
Imported bars are refined or re-refined to 995 or 999 fineness, assayed, insured and transported to bullion dealers. These costs are small per gram but real, and they differ between a metropolitan bullion hub and a smaller upcountry market.
Local association quote and dealer premium
Regional associations publish a daily quote that dealers and jewellers reference. This is where the small city-to-city variation in the published rate comes from: physical tightness, lot sizes, transport and local demand in a given week.
The Council publishes the national board and applies a documented local differential per city, so the number you see on a city page is traceable rather than invented.
Finally, 916 is derived from 999
The 22K (916) rate is arithmetic: 91.6% of the 999 fine rate. If a quoted 916 rate is materially above that, margin is being buried in the metal rate instead of being shown as a making charge. Ask for it to be separated.
That single check — derive 916 from 999 yourself and compare — is the fastest way to test whether a quote is fair.