Gold, silver prices jump over 6% after govt raises import duties on precious metals

Gold and Silver Price: Gold and silver futures surged over 6 per cent on the domestic commodities market after the government sharply increased customs duties on precious metals, citing the need to conserve foreign exchange reserves and shield the economy from mounting global uncertainties linked to the ongoing West Asia crisis.

Gold June futures climbed by Rs 9,512, or 6.20 per cent, to trade at Rs 1,62,954. During the session, the contract touched an intraday high of Rs 1,64,497 and a low of Rs 1,54,851. The previous close stood at Rs 1,53,442.

Silver July futures also witnessed strong gains, rising Rs 18,055 or 6.47 per cent to Rs 2,97,117. The contract hit a day’s high of Rs 3,01,429 and a low of Rs 2,90,224, against the previous close of Rs 2,79,062.

Why are Gold and Silver prices rising today?

Market participants said the sharp rally in bullion prices followed the Centre’s decision to raise import duties on gold and silver from 6 per cent to 15 per cent, while platinum import duty was increased from 6.4 per cent to 15.4 per cent.

The revised duty structure also applies to related products such as gold and silver dore, coins and findings.

According to sources in the Finance Ministry, the move is aimed at moderating non-essential imports at a time when geopolitical tensions in West Asia are creating uncertainty in global crude oil markets and disrupting shipping routes.

Officials said India, being a major crude oil importer, faces the risk of a widening current account deficit and rising inflationary pressures if foreign exchange outflows are not managed carefully.

“India’s foreign exchange resources must be prioritised towards essential imports such as crude oil, fertilisers, industrial raw materials, defence requirements, critical technologies and capital goods,” Finance Ministry sources said.

They noted that precious metals, while culturally important and widely used for investment purposes, account for substantial foreign exchange outflows and have relatively limited industrial linkages compared to critical imports.

Finance Ministry sources clarified that the latest increase in customs duty is not intended to prohibit imports of bullion products. “It is a carefully calibrated and proportionate intervention designed to encourage moderation, not a ban,” sources said, adding that consumer choice and market flexibility continue to remain intact.

The latest increase effectively reverses the customs duty reduction announced in the Union Budget 2024-25, when the government had reduced duties on gold and silver from 15 per cent to 6 per cent and on platinum from 15.4 per cent to 6.4 per cent amid relatively comfortable macroeconomic conditions.

Officials indicated that customs duty rates on precious metals have historically been adjusted in line with changing economic circumstances and may be reviewed again if global pressures ease in the future.

The move also aligns with the broader economic discipline measures advocated by the Prime Minister, who has urged citizens to reduce avoidable foreign expenditure, conserve fuel and support economic resilience through responsible consumption.

Finance Ministry sources described the duty hike as a preventive and forward-looking measure aimed at reducing vulnerability to external shocks before economic pressures intensify further.

Analysts said the sharp jump in domestic bullion prices reflected expectations of higher import costs following the duty revision, which could tighten supplies and increase landed prices in the local market.

Gold and Silver Price Movement

On a 52-week basis, gold futures have gained around 58.7 per cent from the low of Rs 1,02,685, though prices remain nearly 19 per cent below the 52-week high of Rs 2,02,984. Trading volume in gold futures stood at 4,66,300 contracts, while open interest was recorded at 9,087 lots.

Silver futures have risen nearly 152 per cent from the 52-week low of Rs 1,17,811, but are still about 35 per cent below the 52-week high of Rs 4,57,328. Volume during the session stood at 1,10,130 contracts, with open interest at 8,008 lots.

Traders said bullion markets are likely to remain volatile in the near term amid geopolitical tensions, fluctuations in global commodity prices and evolving government policy measures related to imports and foreign exchange management.