Due to weak demand and reduction in import duty, gold prices continue to fall
Gold Price Today: Finance Minister Nirmala Sitharaman announced a reduction in customs duty on gold in her budget speech on Tuesday. Since then, the decline in gold prices has continued. On Tuesday, gold became cheaper by Rs 3350 and closed at Rs 72300 per 10 grams. On Wednesday also, the price of gold fell by Rs 650.
The gold prices slid Rs 650 to Rs 71,650 per 10 grams on Wednesday on weak demand from jewelers and the announcement of its reduction in import duty in the 2024-25 budget. The precious metal closed at Rs 72,300 per 10 grams after falling by Rs 3,350 in the previous session on Tuesday, according to the All India Sarafa Association. The price of silver remained stable at Rs 87,500 per kg.
Gold of 99.9 percent and 99.5 percent purity declined by Rs 650 each to Rs 71,650 per 10 grams and Rs 71,300 per 10 grams, respectively. Traders attributed the fall in gold prices to the government's move to cut customs duty on several products, including gold and silver. Customs duty on gold and silver was reduced from 15 percent to 6 percent. The gold prices dropped Rs 4,000 per 10 grams in the last two sessions.
Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd, said, "Finance Minister Nirmala Sitharaman announced a cut in import duty in the budget. This had an impact on the gold-silver market. On the other hand, prices on Comex rose, increasing its disparity with domestic prices."
Modi says that domestic prices may also take some time to reflect the impact of the duty cut and bring it in sync with Comex. In the international markets, Comex gold was trading higher by $6 an ounce at $2,461.20 an ounce.
Kainaat Chainwala, AVP, Commodity Research, Kotak Securities, said, "Gold continued to gain on Wednesday and is trading above $2410 an ounce. This is possible amid expectations of upcoming data releases in the US, which may support Fed rate cuts."
According to Pranav Mer, Vice President, EBG- Commodity & Currency Research at JM Financial Services, gold prices are trading positively due to gains in the overseas market and support from buying at corrective levels after a sharp sell-off due to the duty cut on Tuesday.
Going forward, traders' focus will be on US GDP data due on Thursday and personal consumption expenditure (PCE) inflation data due on Friday, which may give more indications about Fed rate cuts.
