Gold and silver prices in the domestic market have shown an upward trend following the government's decision to increase import duties on precious metals. The government raised the import duty from 6% to 15% to discourage gold imports and preserve foreign exchange reserves for essential needs like crude oil. A day after the duty hike, the government capped gold imports under the Advance Authorisation scheme at 100 kilograms. This scheme allows jewellery exporters to import raw materials without paying import duty. Authorities have also tightened the rules for issuing and supervising Advance Authorisations for gold imports. Previously, there was no upper limit on the quantity of gold that could be imported through this route.
Gold Rate Today: Domestic Market Update
According to market analyst Saumil Gandhi, gold prices posted moderate gains in the domestic market, supported by positive trends in international markets and the persistent weakness of the Indian rupee. However, gains were limited due to elevated prices dampening physical demand and restraining broader buying activity. The recent increase in import duties led to a sharp rise in domestic gold prices, prompting investors to book profits and postpone fresh purchases. This added to the weakness already visible in physical demand. Consequently, discounts in India's gold market widened significantly, with spot market discounts surging to an all-time high of over USD 200 per ounce.
Gold Imports and Duty Structure
India, the world's second-largest consumer of gold after China, largely imports the precious metal to meet demand from the jewellery sector. These purchases result in a significant outflow of foreign exchange. Under the duty revisions announced on Wednesday, the government doubled the basic customs duty on gold to 10%, while the agriculture infrastructure and development cess (AIDC) was increased five times from 1% to 5%. As a result, the effective import duty on both gold and silver now stands at 15%. Additionally, importers are required to pay a 3% Integrated GST (IGST), pushing the overall tax incidence to 18.45%, compared with 9.18% earlier. India's gold imports climbed more than 24% in 2025-26 to touch a record USD 71.98 billion. However, in terms of quantity, imports declined 4.76% during the year to 721.03 tonnes.
International Market Trends
The dollar has strengthened by more than 1% this week, making dollar-priced bullion more expensive for buyers using other currencies. Brent crude prices have climbed around 5% this week and remained above the $106-a-barrel mark as the Iran conflict continued, keeping the crucial Strait of Hormuz largely blocked. Spot gold dropped 0.6% to $4,619.49 per ounce by 0045 GMT. The precious metal has declined 1.9% so far this week. US gold futures for June delivery fell 1.3% to $4,625.70. Gold prices slipped to their lowest level in more than a week on Friday and were headed for a weekly loss as surging energy prices intensified inflation concerns and strengthened expectations of higher interest rates remaining in place for longer. Investors were also closely monitoring talks between Donald Trump and Xi Jinping.
Advance Authorisation Scheme and New Rules
The Advance Authorisation scheme for gold permits duty-free imports of inputs used in the manufacture of export products. Apart from raw materials, it also covers packaging material, fuel, oil, and catalysts consumed during the production process. The move to cap gold imports under it is important since the aim is to discourage gold buying. In a public notice, the Directorate General of Foreign Trade stated that Advance Authorisation for gold imports "shall be issued subject to a maximum permissible quantity of 100 kilograms." The notification further said that first-time applicants seeking Advance Authorisation will now be subject to mandatory physical inspection of their manufacturing facilities. The verification process will assess the existence of the unit, along with its production capacity and operational status.
