Will Gold and Silver Prices be Cheaper After Cut in Import Tariff Prices?

The government of India has reduced the import tariff on gold by $11 per 10 grams, lowering the price to $927 per 10 grams. This change comes amid ongoing selling pressure on gold, primarily due to a rebound in the dollar index and profit-taking. The import tariff price of gold represents the base price set by the government to calculate the duty on imported gold. This price is periodically reviewed and adjusted based on market conditions, including fluctuations in the dollar index and global gold prices.

Reduction in Import Tariff Prices for Silver

In addition to gold, the import tariff on silver has been reduced by $18 per kilogram, bringing it to $1,025 per kilogram. This marks the second adjustment to silver’s import tariff in recent weeks, as the government previously raised the base import price by $42 per kilogram in February.

The government revises the import tariff prices for both gold and silver every fortnight. These tariffs serve as the reference prices for valuing gold and silver imports, with import duties based on these prices.

Rising Gold Prices

As the world’s largest importer of silver and the second-largest importer and consumer of gold, India’s import policies significantly influence global precious metal markets. As per news reports, India’s gold imports in February are expected to drop to around 15 metric tons, the lowest for the month in two decades, compared to 103 tons in February 2024.

Gold prices rose on March 3, driven by strong spot demand. Gold futures increased by ₹478 to ₹84,697 per 10 grams as speculators opened new positions, spurred by a decline in the dollar’s value and rising global tensions, which boosted gold’s appeal as a safe haven. The ongoing Ukraine-Russia conflict and uncertain US tariff policies also contributed to gold’s attractiveness.

On the Multi Commodity Exchange, April gold contracts rose by ₹478 (0.57%) to ₹84,697 per 10 grams, with a business turnover of 13,686 lots. Globally, gold futures in New York rose by 0.20%, reaching $2,863.46 per ounce.

Conclusion

The cut in import tariff prices generally leads to a decrease in the overall cost of gold in the domestic market. Since the base import price is now set lower, it decreases the cost of importing gold, which can ultimately lower the retail price of gold.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.