How Pawn Shops Price Gold

A pawnbroker's offer is built in four steps: weigh the gold, determine the karat, calculate the melt value at today's price, and apply their percentage. Many shops use pennyweight (dwt) rather than grams — 1 dwt is 1.555 g — so ask which unit they are using and convert if needed.

Example: a 20 g 14k bracelet at a pure-gold price of $135 per gram has a melt value of 20 × 0.585 × $135 = $1,580. A shop paying 70% would offer about $1,105 to buy it, and perhaps $600–800 as a loan.

When a pawn shop buys your gold outright, it can sell it to a refiner within days, so its risk is low and its offer is higher. A pawn loan is different: the shop holds your item for 30–120 days, charges interest and fees, and must be able to recover its money if you do not return. Because the gold price might fall in that period, loans are typically 25–60% of melt value.

Interest rates on pawn loans are set by local law and are often high — monthly rates of 2–25% are common depending on the country or state. Over a few months the cost of borrowing can exceed what you would lose by selling and buying a similar piece later.

A pawn shop is a middleman. It sells scrap gold to a refiner, which pays it perhaps 90–97% of melt. The shop needs a margin on top of that to cover rent, staff, testing equipment, security and the occasional fake. That leaves sellers with less than they would get from a refiner directly, in exchange for instant cash and no shipping.

Shops with a retail counter may pay above scrap value for pieces they can resell: popular designer brands, heavy chains in current styles, quality diamond rings and watches. If your item is wearable and in good condition, ask whether they will price it for resale rather than by weight.

Small preparation makes a noticeable difference.

• Know your melt value: check the karat page for your gold on the day you go.
• Weigh at home and write it down; ask the shop to weigh in grams in front of you.
• Separate karats so the shop cannot price everything at the lowest one.
• Ask for the offer as a percentage of melt value and compare with at least one other buyer.
• Bring receipts, certificates or boxes for branded items — they support a resale price.
• For loans, ask for the total repayment amount, not only the monthly rate.

In the United States and Canada pawn shops are licensed by states or provinces, record your ID and usually hold purchased items for a few days before melting them so police can check for stolen goods. In the UK, pawnbrokers are regulated by the Financial Conduct Authority and loans are typically six months. In India and South-East Asia gold loans are a mainstream form of credit offered by banks and specialist lenders, often at loan-to-value ratios set by the central bank — in India up to 75% for gold loans. In the Gulf and Egypt, jewellers in the souk usually buy back gold at the daily per-gram rate minus a fixed deduction instead of operating classic pawn loans.

Walk away if a shop will not tell you the weight and karat it measured, uses a scale you cannot see, offers a single lump sum without explanation, or pressures you to decide immediately. A fair buyer is happy to explain the numbers because they are simple.