Gold and Silver Prices Plummet Amid Government Duty Cut

Gold prices dropped significantly by Rs 3,350 to Rs 72,300 per 10 grams in the local market following a government decision to cut customs duties on gold and silver to 6 percent. Similarly, silver prices also tumbled by Rs 3,500 to Rs 87,500 per kg. Market analysts attribute the decline to the reduced input costs and increased export competitiveness resulting from the duty cut.

Gold prices tumbled by Rs 3,350 to Rs 72,300 per 10 grams in the local market here on Tuesday, driven by subdued demand from jewellers following the government's announcement of a customs duty cut on gold and silver to 6 percent.

According to the All India Sarafa Association, silver prices also nosedived by Rs 3,500, or 4 percent, to Rs 87,500 per kg. In the previous session, it had closed at Rs 91,000 per kg.

Further, gold futures on the Multi Commodity Exchange (MCX) plunged by Rs 3,860 or 5.31 percent to trade at Rs 68,858 per 10 grams, hitting a four-month low. The most traded August contract hit Rs 68,500 per 10 grams on the MCX. Meanwhile, silver contracts for September delivery were quoted lower by Rs 4,018 or 4.5 percent to Rs 85,185 per kg on the exchange.

Traders attributed the decline in gold prices to the government's decision to slash customs duties, which also aims to increase value addition, promote export competitiveness, and boost domestic manufacturing.

Finance Minister Nirmala Sitharaman said that the basic customs duty on gold and silver was reduced from 10 percent to 6 percent, adding a 5 percent AIDC. Market analysts noted that this adjustment led to a sharp decline in prices and increased competitiveness in the bullion market.

While Comex gold traded at USD 2,459.20 per ounce, up by USD 17.10, international silver remained flat at USD 29.31 per ounce. Market experts are eyeing upcoming US economic data and Fed comments for further cues.