Home / Business and Economy / India Gold Discounts Hit Record $207 as Duty Hike Sparks Selling
India Gold Discounts Hit Record $207 as Duty Hike Sparks Selling
14 May
Summary
- Gold discounts in India reached a record high of over $207 per ounce.
- India increased gold and silver import tariffs to 15% from 6%.
- The duty hike may potentially encourage gold smuggling into India.
India's gold market is experiencing unprecedented turmoil as discounts widened to a record of over $207 per ounce on Wednesday. This situation arose after the government raised import tariffs on gold and silver from 6% to 15% in an effort to manage foreign exchange reserves.
The substantial increase in import duties triggered a sharp rise in local gold prices, prompting many investors to liquidate their holdings, even at significant discounts. This investor sell-off, coupled with already weak retail demand, has pushed physical market discounts to extraordinary levels, with dealers reporting they were double-checking prices before executing deals.
This duty hike has also raised concerns among bullion dealers about a potential increase in gold smuggling. The wider margin for grey-market operators, estimated at 18% compared to the previous 9%, makes smuggling more attractive as it allows evasion of duties and taxes.
