Budget’24: Gold, silver prices to soften soon, customs duty drops to 6%

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For those who’ve been waiting for gold and silver prices to drop, Budget 2024 has given them a fantastic gift. On 23 July, Finance Minister Nirmala Sitharaman presented the union budget for the fiscal year 2024-25 in the Lok Sabha. Sitharaman announced a reduction in customs duties on precious metals like gold, silver, and platinum. This announcement may lead to softening of market prices for gold and silver in the country.

During her budget speech, Finance Minister Nirmala Sitharaman proposed reducing the customs duty on gold and silver to 6%. The customs duty on gold bars and silver bars will be reduced from 15% to 6%. Similarly, the customs duty on Gold Dore and Silver Dore, that is, unrefined gold and silver, will be cut from 14.35% to 5.35%. Additionally, the duty on coins made of precious metals like gold and silver will also reduce from 15% to 6%.

Customs duty cut on other metals..

In addition to gold and silver, Finance Minister Nirmala Sitharaman announced a reduction in the customs duty on platinum, palladium, osmium, ruthenium, and iridium to 6.4%. Once this decision comes into implementation, the prices of gold, silver, and platinum may drop.

Following the announcement of the customs duty reduction, gold for August delivery on the Multi Commodity Exchange (MCX) has fallen by more than 5%, trading around ₹68,800 per 10 grams. Compared to yesterday, gold is now approximately ₹4,000 cheaper per 10 grams. Similarly, silver for September delivery has dropped by over 4% to ₹85,500 per kilogram.

Attempt to curb record level prices

The government has provided this relief at a time when the prices of both gold and silver were reaching new record levels. Gold prices are currently hovering around ₹73,000 per 10 grams, up from ₹63,870 per 10 grams at the beginning of 2024. This represents a nearly 15% increase in gold prices this year alone. With the reduction in customs duty, there is hope for a softening of prices.

Jewelry traders have long been demanding a reduction in customs duties on precious metals. Traders have argued that the 15% duty rate was excessively high. This caused them to bear a financial burden amounting to thousands of crores of rupees. High gold prices had also been impacting demand, especially for jewelry. The high prices had led to a lack of support for demand during the wedding season as well. However, in this year’s budget, the Modi government has fulfilled the demand for reduced customs duties. This also makes it easier to bring down gold and silver prices.