How do lenders assess the resale value of gold before auctioning it for loan recovery?

Before a pledged gold item is put up for auction, lenders carry out a fresh valuation to avoid relying on outdated figures while approving your gold loan. This assessment is usually done by an authorised valuer and documented as part of the recovery process for your gold loan.

Before gold loan recovery, the valuer begins by rechecking the purity of the gold, often using non-destructive methods such as XRF testing. While hallmarks are considered, the final assessment is based on the actual test reading. Next, the net gold weight is calculated. Stones, clasps, lac, and other non-gold components are removed from the gross weight so that only the pure gold content is valued.

To arrive at the rupee value, lenders typically use an average of recent gold prices rather than a single day’s rate. A small margin may also be applied to account for handling and sale-related costs. Based on this, a reserve price is set for the auction. After the sale, proceeds are adjusted against dues, with any surplus returned to the borrower.