Gold Prices Surge Above ₹1.65 Lakh After Government Hikes Import Duty

An increase in the import taxes for precious metals led to an increase in gold and silver prices locally on Wednesday, 13th May. The price of gold increased by ₹8,550 to reach ₹1.65 lakh for 10 grams. Silver prices were also higher by ₹20,500 for every kilogram of metal.

According to the All India Sarafa Association, the price of silver in the Delhi market was up from Rs 277,000 to Rs 297,500 per kilogram. The price of 99.9 percent pure gold increased by ₹8,550 to become Rs 165,350 per 10 grams, which is more than 5 percent higher than the earlier closing of Rs 156,800 per 10 grams. On Wednesday, the government increased the import duty on gold and silver from 6 percent to 15 percent. The import duty on platinum was also increased from 6.4 percent to 15.4 percent. These new rates became effective on Wednesday. This move was taken to control the rising import bill amid the West Asia crisis and to discourage non-essential purchases. Prime Minister Narendra Modi had also called for curbing gold purchases to reduce foreign exchange expenditure.

Local traders say the real impact of these higher duties will be reflected in purchase bills in the coming days. Harish V, Head of Commodity Research at Geojit Investments Ltd., stated that the increase in import duties will increase local prices and temporarily reduce physical demand. However, he advised investors not to panic, as gold remains a safe investment in times of global uncertainty and domestic currency pressure. Analysts also noted that the weakening rupee has also boosted precious metal prices. The rupee fell to a low of 95.80 against the US dollar, raising concerns about foreign exchange outflows and high crude oil prices.