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Informist, Tuesday, Jul 23, 2024

By J. Navya Sruthi

MUMBAI – Futures contracts of gold and silver fell today on the Multi Commodity Exchange of India as the government of India has cut the import duty on precious metals in the Budget for 2024-25 (Apr-Mar), analysts said. The government has cut customs duty on gold and silver by 9% to 6% today.

The 6% import duty on gold and silver includes 5% basic customs duty, down from 10% earlier, and 1% agriculture infrastructure and development cess, down from 5% earlier. Import duty on gold and silver dore has been cut to 5.35% from 14.35% earlier, which comprises 5% basic customs duty and 0.35% agriculture infrastructure and development cess.

During the announcement of the customs duty cut for gold and silver in today's Budget, the most-traded gold contract on the Multi Commodity Exchange of India fell to 70,551 rupees per 10 gm, 3% from Monday's close and nearly 6% from last week's all-time high of 74,731 rupees per 10 gm. So far in today's session, gold prices have hit a two-month low of 68,500 rupees per 100 rupees, down 5.8% from Monday.

This was one of the long-standing demands of the industry and the announcement, especially at a time when the industry is already grappling with various challenges, will certainly help the "industry to march on the path to progress", Colin Shah, managing director, Kama Jewelery, said in a note.

"This will play a major role in bringing down the cases of smuggling and provide cost benefits to the consumers in the country, which will provide a major fillip to the demand in the domestic market," Shah said. This is likely to trigger the demand for physical gold, Ajay Kedia, director of Kedia Advisory said.

At 1715 IST, the most-active August GOLD contract on the MCX was down 5% at 69,035 rupees per 10 gm. The same-month contract on COMEX was higher by 0.6% at $2,409.2 per ounce.

On the international exchange, gold prices traded higher due to geopolitical tensions and expectations of a 25-basis-point rate cut by the US Federal Reserve at the September meeting. Investors will also track US purchasing managers' index data, due on Wednesday, and US core personal consumption expenditure data on Friday, for cues on the Fed's rate cut path.

However, losses in domestic gold prices are likely to be restricted due to depreciation in the rupee. The Indian currency touched a lifetime low of 83.7125 a dollar during the day, and went on to settle at a record closing low of 83.6875 a dollar against 83.6350 a dollar on Monday.

When the rupee depreciates against the greenback, it makes imports expensive for Indian buyers. This weighs on gold imports, leading to higher prices in the domestic markets, as it is a dollar-denominated commodity. 

SILVER prices were down today on the MCX, taking weak cues from COMEX and industrial metals. Today, silver prices on the MCX hit a month's low of 84,275 rupees per 1 kg, down 5.5% from Monday's close. 

At 1715 IST, the most-active September contract for silver on the MCX was down 4.4% at 85,285 rupees per kg. The same-month contract on COMEX fell 0.2% to $29.25 per oz.

Outlook for the rest of the session:

--MCX gold seen at 67,085–70,925 rupees per 10 gm

--COMEX gold seen at $2,366–$2,422 an oz

--MCX silver seen at 82,481-88,809 rupees per kg

--COMEX silver seen at $28.50-$30.18 an oz

End

US$1 = 83.69 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vidhi Verma

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