India Bullion: MCX gold hits new high, silver surges 1% post Budget

Informist, Tuesday, Jan 31, 2023

By Sayantan Sarkar

MUMBAI – GOLD contracts on the Multi Commodity Exchange of India rose to a lifetime high today as the government kept import duty on the yellow metal unchanged. 

* The basic custom duty on gold, along with the agricultural infrastructure and development cess, stands at 15%. Even though the total duty on imports of gold remains unchanged, the government did reduce the basic customs duty on imports of the yellow metal to 10% from 12.5% earlier. However, the agriculture cess was hiked to 5% from 2.5%.

* The most-active April gold contract on MCX hit a record high of 57,950 rupees per 10 gm. 

* “Markets were expecting a cut in gold import duty in order to support domestic gems and jewellery industry but fears of a wider CAD (current account deficit) as indicated in economic survey likely prompted the authorities to stay put,” said Ravindra V. Rao, head of commodity research at Kotak Securities. 

* SILVER contracts on MCX surged more than 1% after the government raised the basic custom duty and agriculture infrastructure cess in the Union Budget for 2023-24 (Apr-Mar), which was presented by Finance Minister Nirmala Sitharaman earlier today. This was done to align the duty structure of silver with gold. 

* The basic customs duty on silver was raised to 10% from 7.5% and the Agriculture Infrastructure and Development Cess on imports to 5% from 2.5% earlier. Customs duty for silver dore was hiked to 10% from 6.1% and the agriculture infrastructure cess to 4.35% from 2.5%. 

* Additionally, the Budget also announced that the conversion of physical gold to electronic gold receipts and vice-versa will not attract any capital gains. 

* On COMEX, gold prices were flat ahead of the outcome of the two-day policy meeting of the US Federal Reserve later today. The market expects the US Fed to slow its pace of interest-rate hikes, which is likely to be bullish for prices. 

* At 1703 IST, the most-active contracts of bullion were:

  –April gold was up 1.3% at 57,917 rupees per 10 gm on MCX

  –April gold was flat at $1,945.30 an ounce on COMEX

  –March silver was up 1.6% at 69,930 rupees per kg on MCX

  –-March silver was down 0.8% at $23.63 an ounce on COMEX

* Outlook for the evening session:

  –MCX gold seen at 56,726–58,030 rupees per 10 gm

  –COMEX gold seen at $1,910–$1,971 an ounce

  –MCX silver seen at 68,078-70,632 rupees per kg

  –COMEX silver seen at $23.25-$24.85 an ounce

End

US$1 = 81.92 rupees

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

Edited by Maheswaran Parameswaran

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Source: Cogencis