Navigating India’s gold market amidst duty cuts…

By Nibedita Sen

IN a move that has stirred the Indian gold market, Finance Minister Nirmala Sitharaman’s recent budget announcement slashed customs duties on gold and silver. The new rates, now set at 6% for gold and silver and 6.4% for platinum, mark a significant reduction from previous levels. This change is poised to impact both the prices of these metals and the dynamics of investment in them.
The decision to cut customs duties has already led to a decline in gold prices, which had been on a steep ascent. For instance, gold prices have surged from Rs28,006.50 per 10 grams in 2014 to Rs74,490.00 in 2024. This substantial increase underscores the volatility and rising costs associated with precious metals. As prices continue to climb, the recent duty cut offers a rare opportunity for consumers and investors alike.
“Exciting news for those planning to buy jewellery for weddings and other special occasions,” says Vikram Verlekar, MD of Ulhas Jewellers. “Definitely, gold consumption will increase, and consumers will be relieved of the record-high prices.” Verlekar’s comments reflect a broader sentiment within the industry that the reduction in duties will make gold more accessible and potentially spur increased demand.
India’s deep-rooted cultural and emotional connection with gold, coupled with its status as one of the largest global consumers, adds another layer of complexity to investment decisions. Historically, gold has been a preferred investment during times of economic uncertainty, and with the current geopolitical tensions, the appeal of gold as a safe haven continues to grow.
However, prospective investors should carefully weigh their options. The recent drop in prices might seem like an opportune moment to invest, but it is crucial to consider the broader economic context. While the duty reduction is expected to make gold more affordable, the overall trend in precious metal prices has been upward, influenced by global economic conditions and market uncertainties.
The potential for future price increases cannot be dismissed. As global investment in precious metals rises and geopolitical risks persist, the long-term trajectory of gold prices could remain bullish. Investors must remain vigilant about market trends and seek professional advice to navigate the complexities of investing in gold.
While the customs duty reduction on gold presents a favourable buying opportunity, it also calls for cautious consideration. The interplay between price trends, economic factors, and personal investment goals will ultimately guide whether now is the right time to invest in gold or to wait for more favourable conditions.