India’s gold discounts surged to a record level above $200 an ounce after the government lifted gold and silver import duties to 15% from 6%. Higher local prices hit an already weak demand backdrop, prompting investors to sell even at steep discounts. While retail buyers and jewelers stayed away, gold futures jumped 7.2% to the highest in two months and investors booked profits in gold ETFs. Dealers also fear the hike will fuel smuggling by widening grey-market margins.
In a late Tuesday move, India raised import duties on gold and silver to 15% from 6%, effective May 13, combining a 10% basic customs duty with a 5% Agriculture Infrastructure and Development Cess. The government says the aim is to curb overseas buying of precious metals and ease pressure on foreign exchange reserves, even as bullion prices reportedly jump about 7%.
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India’s bullion market is set for a reset as higher import duties on gold and jewellery threaten to cool demand and shrink imports. Analysts expect the supply shift to push up domestic gold prices, with knock-on effects for jewellery buyers and gold ETF investments. Silver, in contrast, may gain from global supply deficits and disruption risks.
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