The government has increased import duties on gold and silver to 15% from 6% as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis. According to reports from ET Now, this policy change is expected to impact silver prices in both domestic and global markets. The duty hike represents a significant increase from the previous rate, potentially affecting the availability and pricing of silver in India. As per recent reports, the recent increase in import duty on silver from 6% to 15% aims to reduce imports and support the Indian rupee amid rising economic pressures. This hike can lead to higher domestic silver prices as import costs increase, potentially making silver less accessible to consumers and investors.
Silver prices are currently reeling under pressure in domestic and global markets amid continued geopolitical tensions and rising bond market volatility. As reported by ET Now, although considered less expensive than gold, white metal remains a choice for both investment and use in jewellery, especially in regions where these are preferred as common ornaments. The precious metal is facing headwinds from multiple factors including geopolitical uncertainties and the recent policy changes affecting import costs. Geopolitical tensions, such as conflicts in West Asia and US-Iran relations, significantly impact silver prices. These tensions often lead to increased safe-haven buying as investors seek to protect their assets. Fluctuations in the US dollar and global economic uncertainty also contribute to price volatility in the silver market, prompting traders to react to news and developments in international relations. Latest market analysis suggests that rising bond yields create headwinds for gold and silver, with the 10-year note yield ending the week above 4.5% and 30-year Treasuries above 5%, potentially pushing the Federal Reserve to raise interest rates by year-end.
The precious metals market is facing additional pressure from rising bond yields and Federal Reserve rate hike expectations. According to market analysts, the likelihood of 50 basis points in hikes this year has risen to 22% from zero a month ago, which could put downward pressure on gold prices. As per Trade Nation, David Morrison expects gold to struggle as markets aggressively price in rate hikes, with the CME's FedWatch Tool showing a 42% probability of a 25-basis-point rate hike before year-end. However, some analysts note a fine line between higher yields driven by inflation and a potential bond crisis that would support precious metals as a store of wealth. Naeem Aslam from Zaye Capital Markets stated that if long yields rise but gold stops falling, it would indicate investors view higher yields as a reason to own gold rather than avoid it, potentially reviving demand for wealth preservation.
The duty increase forms part of broader measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis. According to ET Now, this policy shift reflects the government's strategy to manage precious metal imports and their impact on India's trade balance. The move comes as the country faces increased costs related to precious metal imports due to geopolitical developments in the West Asia region. The recent trends show significant volatility in silver prices, with sharp increases and declines driven by market sentiment and geopolitical events. For instance, after a surge due to safe-haven demand, prices have seen corrections as investors lock in profits, highlighting the sensitive nature of silver trading to both local and global economic cues.
