Gold prices soared by Rs 8,550 to a little over Rs 1.65 lakh per 10 grams in the local market here on Wednesday after the government increased the import duty on precious metals to 15 per cent.
Silver prices jumped by Rs 20,500 to Rs 2,97,500 per kg in Delhi markets from Rs 2,77,000 per kg (inclusive of all taxes) on the previous day.
Gold of 99.9 per cent purity increased by Rs 8,550, or over 5 per cent, to Rs 1,65,350 per 10 grams from the previous close of Rs 1,56,800 per 10 grams.
Local traders said the actual impact of the higher levy would play out over the coming days once the increased duty begins reflecting in purchase bills. A weak rupee also inflated the prices of precious metals, analysts said. The rupee dropped to a low of 95.80 against the US dollar amid concerns over forex outflows and high crude oil prices.
India is the world's second-largest consumer of precious metals, and prices have rallied in recent months amid an unabated rise in demand, including for investment purposes. Gold is India’s second-largest commodity import after crude oil, and rising purchases have added to foreign-exchange outflows, pressuring the rupee to record lows.
Jewellery retailers suggest quantitative restrictions instead
The Gem & Jewellery Export Promotion Council cautioned that raising gold import duty does not curb imports, but inflates prices. Jewellery retailers stated that imposing quantitative restrictions on gold and silver imports, rather than raising import duties, would be a more effective way to curb the country's current account deficit.
Also read: Import duty on gold, silver more than doubled to support rupee
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