Jaipur : In the budget, the central government reduced the custom duty on gold and silver from 15 percent to 6 percent, due to which 10 grams of gold became cheaper by Rs 5100 and silver by Rs 8,000 per kg in just 3 days. 10 grams of 24 carat gold on MCX fell to a low of Rs 67,600 on Thursday, which was at Rs 72,641 on 22 July. Similarly, the price of silver also came down to Rs 80,666 per kg on MCX, which was at Rs 89,245 on 22 July. There has been a big fall in the prices of gold and silver in bullion markets also in 3 days. In Jaipur, 10 grams of 24 carat gold fell by Rs 1100 to Rs 69,900 on Thursday, which was at Rs 75,050 on 22 July. Similarly, its price in Indore was Rs 70,000, which had reached Rs 76,000 before the budget. Silver prices in bullion markets have also fallen by Rs 6,000 to Rs 8,000 in the last 3 days. Due to the sharp fall in the price of gold and silver, people have started flocking to jewellery shops to buy gold at cheaper prices.
Impact on gold bonds
The reduction in custom duty has affected the sovereign gold bond. Sovereign gold bond prices on NSE are seeing a decline of 5 to 6 percent. SGB, launched in August 2016, is maturing in August 2024. Its investors are now expected to get 3 to 5 percent less return than before.
Sales of heavy gold jewellery increased by 15%
Jewelers in Mumbai and Delhi say that they have to attend to customers till late at night. They have to work at night to deliver gold jewellery on time. Jewelers in Mumbai’s Jhaveri Bazaar said that due to the sudden increase in demand, many shopkeepers have cancelled their workers’ holidays for the next one week. Since the custom duty was reduced, the demand for gold has increased by more than 20 percent. Jewelers say that in the last three days, the sale of heavy gold jewellery for weddings has increased by 15 percent.
Silver may reach Rs 75,000
The price of 24 carat gold may fall to Rs 65,000 per 10 gram and silver to Rs 75,000 per kg in the Indian market, because more box-purchasing is happening in the speculative market and there are not many physical buyers.
Rates and room for fall
Before the budget, gold was trading above Rs 72,500 per 10 grams on MCX, which has now come down below Rs 68,000. The reduction in custom duty can affect the gold prices by up to Rs 6,000. That means gold can become cheaper by another Rs 2,000.
Due to this fear, there is a lot of buying
Gold and silver traders said that some people are also worried that the government may withdraw the decision to reduce custom duty due to the increase in demand for gold. People are expressing apprehension that the GST Council may increase the GST rates on gold from 3% to 12%, due to which the price of gold for customers may again reach the old level. Due to this fear, customers have started shopping for jewellery.
