Highlights: MCX Gold, Silver Futures hit 6% upper circuit – How will the import duty hike impact demand?

The Gold and silver Futures on MCX jumped nearly 7% each. Gold is trading at Rs 1,62,011 per 10 grams while silver is trading at Rs 2,98,247 per kg.

The Gold and silver Futures on MCX jumped nearly 6% each. Gold is trading above Rs 1,62,450 per 10 grams while silver is trading at Rs 2,97,916 per kg.

On MCX the June contract for gold was last quoted at Rs 1,62,285 per 10 grams, up nearly 6%. While, the most-active contract for silver was quoted at Rs 2,96,800 per kg, up by nearly 6%.

The Gold and silver Futures on MCX jumped nearly 6% each. Gold is trading above Rs 1,62,368 per 10 grams while silver is trading at Rs 2,96,905 per kg.

On MCX, the June contract for gold was last quoted at Rs 1,62,685 per 10 grams, up by 6%. While, the most-active contract for silver was quoted at Rs 2,97,900 per kg, up by nearly 7%.

"The sharp increase in import duty on gold and silver from 6% to 15% is likely to make consumers more cautious in the short term, especially when it comes to large-ticket jewellery purchases," said Sharad Arora, Co-Founder, Ethera, a BlueStone-backed lab-grown jewellery brand.

However, he noted that jewellery demand in India is deeply sentimental linked to weddings, gifting and cultural traditions. "So we do not expect demand to disappear entirely, especially during the peak wedding season. What is more likely is a shift in buying behaviour, with consumers becoming more practical and value-conscious in their purchases," Arora said.

On MCX the June contract for gold was last quoted at Rs 1,62,512 per 10 grams, up nearly 6%. While, the most-active contract for silver was quoted at Rs 2,97,400 per kg, up more than 6%.

“Gold prices witnessed a sharp gap-up opening after the import duty hike, with MCX Gold surging nearly Rs 9000 or 5.87% to Rs 162450, while COMEX gold remained relatively flat below $4700. The sharp rally in domestic prices reflects the immediate impact of higher import costs on bullion," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

"Our structural view on gold and silver remains constructive. The global de-dollarisation theme, central bank buying, and currency-debasement hedging are all multi-year drivers that operate independently of any domestic tax decision. We expect international gold to move towards $6,000 an ounce over the next 12 to 18 months, with silver positioned as a meaningful beneficiary alongside," said Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities.

Gold ETFs also traded firmly in the green. Tata-Gold Exchange Traded Fund rose 5.41% to Rs 15.40, while Nippon India ETF Gold BeES gained 5.69% to Rs 131.70. Groww Gold ETF traded at Rs 15.55, up 5.78%, and ICICI Prudential Gold ETF climbed 5.74% to Rs 136.40.

Zerodha Gold ETF advanced 5.48% to Rs 25.03, while SBI Gold Exchange Traded Scheme rose 5.74% to Rs 135.66. HDFC Gold ETF traded at Rs 135.80, up 5.57%, and Angel One Gold ETF gained 5.06% to Rs 14.75.

Commenting on the duty hike, Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities said, " Our structural view on gold and silver remains constructive. The global de-dollarisation theme, central bank buying, and currency-debasement hedging are all multi-year drivers that operate independently of any domestic tax decision. We expect international gold to move towards $6,000 an ounce over the next 12 to 18 months, with silver positioned as a meaningful beneficiary alongside."

He added that rupee trading near the 95.60 per dollar, is reflective of the cumulative strain of elevated crude prices and the West Asia geopolitical premium. "Active RBI intervention and the duty-led compression of gold imports should help moderate further weakness. The path of the rupee from here will be shaped less by gold and more by the trajectory of crude and the West Asia situation," the analyst said.

Silver-ETFs also recorded strong gains during the session. Tata Silver Exchange Traded Fund traded at Rs 26.98, up 5.47%, while Nippon India Silver ETF rose 5.44% to Rs 265.73. Groww Silver ETF moved up 5.43% to Rs 27.20 and Zerodha Silver ETF gained 5.11% to Rs 28.16. HDFC Silver ETF climbed 5.54% to Rs 266.20, while ICICI Prudential Silver ETF advanced 5.25% to Rs 277.04.

Read More: Gold, Silver ETFs surge as bullion skyrockets to record Rs 1.62 lakh; Silver nears Rs 3 lakh

Commenting on the import hike, Hareesh V, Head of Commodity Research, Geojit Investments said, "Higher duties may also create incentives for illegal imports, as was observed earlier when the duty stood at 15% before being reduced to curb smuggling."

The analyst added that over the short run In the short run, the import hike measure can help reduce the import bill and ease pressure on the widening Current Account Deficit (CAD). "Since gold accounts for nearly 9–10% of India’s total import bill, the hike could provide some protection to foreign exchange reserves."

The impact of import hike would prove to be challenging for the gems and industry, and could revive the activity in grey market the Gems and Jewellery Council (GJC) said on Wednesday.

"Business is now going to become difficult on the back of the Prime Minister's austerity measures and following the import duty hike in bullion. What the industry fears is that this will give rise to grey market... smuggling is likely to grow, setting up a parallel economy in the country," GJC chairman Rajesh Rokde told PTI.

" MCX Gold opened with a sharp gap-up and is trading above Rs 1,63,000, breaking out of its medium-term consolidation zone and surging past key resistance levels near pre-war highs. Immediate resistance is seen at Rs 1,64,000; a sustained move above this level could extend the rally toward Rs1,65,000–Rs1,66,000." said Ponmudi R, CEO of Enrich Money.

He added on the downside, Rs 1,62,000 acts as immediate support; a break below this level may take prices toward Rs 1,61,000–Rs 1,60,000. The near-term bias remains strongly bullish, driven by safe-haven demand amid ongoing geopolitical uncertainties.

The Gold and silver Futures on MCX jumped nearly 6% each. Gold is trading above Rs 1.62 lakh /10 gm while silver is trading at Rs 2.97 lakh /kg

On MCX the most-active future contracts of gold and silver were up more than 6%. MCX gold was trading at Rs 1,62,715 per 10 grams, while the most active- silver contract was quoted at Rs 2,97,140 per kg.

Both the precious metals have hit their upper circuit.

The gold and silver prices are i focus after the government hiked customs duties on precious metals like gold, platinum and silver, citing the need to conserve foreign exchange and protect the economy from growing global pressures stemming from the ongoing West Asia crisis.

Import duty on gold and silver has been raised from 6% to 15%, while platinum will now attract a duty of 15.4%, up from 6.4%. The changes also apply to related items such as gold and silver dore, coins, and findings.

According to ANI, sources in the Finance Ministry said the move is aimed at moderating non-essential imports at a time when geopolitical tensions are driving volatility in crude oil markets and disrupting international shipping routes. As a major oil importer, India faces heightened risks of a widening Current Account Deficit (CAD) and inflationary pressure if foreign exchange outflows are not carefully managed.

The decision also aligns with the broader economic discipline advocated by Prime Minister, who has urged citizens to reduce avoidable foreign expenditure, conserve fuel, and support national economic resilience through responsible consumption.