Gold prices surged across India on Wednesday after the government announced an increase in import duty on the yellow metal. The hike in import duty led to a sharp rise in gold rates, with prices jumping by over Rs 1,000 per 10 grams in several cities.
Government Increases Import Duty on Gold
The central government raised the import duty on gold from 10% to 12.5%, effective immediately. This decision aims to curb the rising import of gold, which has been putting pressure on the current account deficit. The move is also expected to boost domestic gold recycling and reduce reliance on imports.
Impact on Gold Prices
Following the announcement, gold prices witnessed a significant uptick. In the national capital, Delhi, gold rates rose to Rs 72,800 per 10 grams for 24-carat purity, up from Rs 71,600 the previous day. Similarly, in Mumbai, the price climbed to Rs 72,650 per 10 grams. Other major cities also saw comparable increases.
- Delhi: Rs 72,800 per 10 grams (24 carat)
- Mumbai: Rs 72,650 per 10 grams (24 carat)
- Chennai: Rs 72,900 per 10 grams (24 carat)
- Kolkata: Rs 72,700 per 10 grams (24 carat)
- Bengaluru: Rs 72,600 per 10 grams (24 carat)
- Hyderabad: Rs 72,750 per 10 grams (24 carat)
Reasons Behind the Duty Hike
The government cited the need to discourage gold imports, which have surged in recent months. India is one of the largest consumers of gold globally, and high imports have widened the trade deficit. By increasing the import duty, the government aims to make gold imports more expensive, thereby curbing demand and narrowing the current account deficit.
Market Reaction
The gold market reacted swiftly to the duty hike. Jewellers reported a rush of customers looking to buy gold before prices rise further. However, some analysts believe that the price increase may dampen demand in the short term. The stock market also saw a mixed reaction, with gold-related stocks gaining while consumer stocks faced pressure.
Experts suggest that the duty hike could lead to a temporary spike in gold prices, but long-term trends will depend on global factors such as US interest rates and geopolitical tensions. The domestic gold market is expected to remain volatile in the coming days.
City-Wise Gold Rates (24 Carat per 10 grams)
| City | Rate (Rs) |
|---|---|
| Delhi | 72,800 |
| Mumbai | 72,650 |
| Chennai | 72,900 |
| Kolkata | 72,700 |
| Bengaluru | 72,600 |
| Hyderabad | 72,750 |
| Ahmedabad | 72,680 |
| Pune | 72,620 |
| Jaipur | 72,780 |
| Lucknow | 72,740 |
Note: These rates are indicative and may vary across different jewellers and locations. The prices include GST and making charges are extra.
Outlook for Gold Prices
With the import duty hike now in effect, gold prices are expected to remain elevated in the near term. The government's move is likely to impact consumer behavior, with many potential buyers postponing purchases in anticipation of a price correction. However, given the cultural affinity for gold in India, demand is expected to remain resilient over the long term.
Investors are advised to keep an eye on global cues and domestic policy changes to make informed decisions. The yellow metal has always been a safe-haven asset, and the current environment of economic uncertainty could further support its prices.
