Gold prices today fall sharply for second day, silver rates slump

gold-jewellery

Gold prices fell sharply in Indian markets today for second day in a row. On MCX, gold futures fell 0.6% to ?48,438 per 10 gram. Silver futures slumped 2.2% to ?72,009 per kg on profit-taking after the recent surge. Gold prices had plunged 1.2% or ?627 per 10 gram in the previous session while silver had surged 6% or ?4238 per kg. In Budget 2021, on Monday, the Indian government has slashed import duties on gold and silver.

The government cut import duties on gold and silver to 7.5% from 12.5%, but imposed a 2.5% cess on the imports. After the changes, gold imports would effectively attract 10.75% tax against 12.5% earlier. The government also reduced import duty on gold dore and silver dore, non-refined mined gold or silver.

The jewellery industry has welcomed the move, saying that it could boost retail demand and curtail smuggling in the world’s second-biggest bullion consumer. Higher demand for gold from India could support global prices, analysts say.

“Indian government decided to cut the base customs duty on gold and silver from 12.5% to 7.5% and imposed a 2.5% agriculture Infrastructure and development cess. The net implication comes around 10.75% after considering the cess and applicable social welfare surcharge. Since MCX Gold and silver price is inclusive of customs duty, a cut in tax will reduce domestic price,” said Ravindra Rao, VP-Head Commodity Research, Kotak Securities Ltd.

“We saw the gold price falling sharply in reaction to the duty cut. However, the impact may not match the change in duty exactly. India is a major consumer of gold and silver and lower price may improve demand outlook boosting international prices. Going forward, Indian gold and silver prices have become cheaper due to lower taxes however this does not affect the price trend. Since India is largely a price taker, trend in the international market will remain a key price determining factor. Since we maintain a bullish view on COMEX gold and silver, we expect MCX Gold and silver also to trade with a positive bias,” he added.

In global markets, silver prices today fell more than 2% as investors booked profits following 11% rally in the previous session that pushed prices to near a eight-year peak. Spot silver was down 1.7% to $28.48 an ounce, after hitting $30.03 in the previous session.

In global markets, silver has zoomed in recent sessions as retail investors, egged on by messages on Reddit, piled into the market in an attempt to push up prices.

A top official of US Commodity Futures Trading Commission (CFTC) on Monday said the agency is “closely monitoring” recent activity in silver markets, as volatility in equity markets spilled into trading of the precious metal.

In global markets, gold today eased 0.2% to $1,856.86 per ounce.

News Source:- Livemint.com

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