Gold prices drop by Rs 5000/10gm post Budget

July 26, 2024 12:38

Gold prices have corrected sharply by 7 per cent or Rs 5,000 per 10 grams in the local markets after the government slashed basic custom duty on gold, and the lower costs will encourage more people to invest in the yellow metal, both as a commodity and as a financial asset, experts say.

Analysts said customs duty cut has made gold imports cheaper. The move will help curb the rampant issue of gold smuggling, leading to growth in the organised jewellery sector.

"The cut in basic custom duty on gold prices makes the yellow metal cheaper. While this can lead to weaker market sentiments due to the sudden change, retail investors stand to benefit from the new, more attractive pricing for gold," Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities told PTI.

Echoing similar sentiments, Krishnan R-Director & CEO of Unimoni Financial Services said lower costs will encourage more people to invest in gold, both as a commodity and as a financial asset, which is often seen as a hedge against inflation and currency devaluation. Following the Budget announcement by Finance Minister Nirmala Sitharaman that the government has slashed basic customs duties on gold and silver from 15 per cent to 6 per cent, gold prices crashed by Rs 3,350 to Rs 72,300 per 10 grams in the national capital on Tuesday. The precious metal prices continued the downtrend and plunged by Rs 650 on Wednesday.

The yellow metal rates saw another steep fall on Thursday, nosediving by Rs 1,000 to settle at Rs 70,650 per 10 grams, as per the All India Sarafa Association. After the duty cut, the yellow metal has declined Rs 5,000 per 10 grams or 7.1 per cent in the past three sessions, since July 23 when it had fallen Rs 3,350 to end at Rs 72,300 per kg. Also, gold of 99.5 per cent purity declined by Rs 1,000 to Rs 70,300 per 10 grams on Thursday.

It had also lost ground by Rs 5,000 per 10 grams in the three previous sessions. On Thursday, silver rates also lost ground by Rs 3,500 per kg to Rs 84,000 per kg. In the past three sessions, the rates of the bright metal fell sharply by Rs 7,000 or 8.3 per cent to Rs 84,000 per kg from Rs 91,000 per kg. Traders also said that a sharp correction in gold prices have revived the demand for jewellery among consumers as they flocked to jewellery outlets to take advantage of lower prices.

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