Cut in Customs Duty to 6% Will Make Gold and Silver to Become Cheaper

Changes introduced in Budget 2024

Good news for gold and silver lovers! The government has decided to make these precious metals more affordable. They have reduced the tax on imported gold and silver from 15% to just 6%. This move is expected to make these precious metals more affordable and accessible to a wider audience. This is great news for people who were planning to buy gold or silver items, as they can now expect to pay less. This decision could also stimulate demand and potentially boost the economy.

History of Gold and Silver Price in India

Gold and silver have always held a special place in Indian culture, often seen as symbols of wealth and prosperity. Over the decades, their prices have shown significant variations due to various economic, political, and social factors. Gold prices have generally seen a steady increase, reflecting global economic conditions, inflation rates, and market demand. For example, in the early 2000s, gold was priced at around INR 4,400 per 10 grams. By 2011, it soared to approximately INR 26,400, driven by economic uncertainty and increased investment demand. In recent years, prices have remained volatile, influenced by global trade tensions and currency fluctuations.

Similarly, silver has experienced notable price shifts. In the early 2000s, silver was priced at around INR 7,900 per kilogram. By 2011, it surged to about INR 56,900 per kilogram, largely due to industrial demand and investment trends. However, like gold, silver prices have also been subject to volatility, affected by global market dynamics and industrial usage.

Understanding the historical price trends of gold and silver helps investors make informed decisions about their investments, considering both the past performance and future potential of these precious metals 

Additional read: Why is Gold Price Increasing in India?

Changes introduced in Budget 2024

In the 2024 budget, the Indian government introduced several changes for gold and silver to boost the economy and promote investment. Customs duty on gold and silver was reduced from 15% to 6%, benefiting both investors and the jewellery industry and making it more affordable for consumers. This reduction aims to curb smuggling and encourage legal imports. These changes are expected to increase demand for gold and silver, stabilize prices, and support the growth of related sectors in the Indian economy.

Impact on Gold Prices

• With the cost of importing gold which has now become lower, jewellers and retailers can purchase gold at reduced rates. This is likely to lead to a decrease in the price of gold jewellery, coins, and bars for consumers.
• The reduction in customs duty is seen as a move to make gold more accessible to the general public, potentially increasing demand and sales in the domestic market.
• However, it's important to note that while the customs duty reduction will play a key role, other factors such as global market trends, currency exchange rates, and inflation will also influence the final price of gold.
• The overall impact on the economy could be positive, as increased gold sales can contribute to higher consumer spending and potentially boost related industries.
• It's also worth considering that the new budget policy might affect the import volume and the trade balance, as cheaper gold could lead to increased imports.
• Consumers and investors alike will be watching closely to see how the market responds to these changes and what the long-term effects on gold prices will be. 

Impact on Silver Prices

• The budget for 2024 has also brought good news for silver enthusiasts, with the customs duty on silver being cut to 6%, similar to gold. This move is expected to have a noticeable impact on the pricing of silver in the market.
• Just like with gold, the reduction in customs duty will make silver cheaper for importers, which is likely to result in lower prices for silver jewellery, coins, and other silver items for consumers.
• For investors, the lower silver prices could present an attractive opportunity to invest in this precious metal, potentially leading to increased trading and investment in silver.
• The silver market, being dynamic, will be influenced by these changes, and it remains to be seen how the market will adjust and what the long-term effects on silver prices will be.
• Overall, the budget 2024's decision to reduce customs duty on silver is seen as a positive step towards making silver more accessible and could have a beneficial impact on the economy through increased sales and consumer spending.

Impact on commodity trading

• The budget for 2024 has introduced changes that are expected to have a significant impact on commodity trading, particularly in the precious metals sector.
• With the reduction of customs duty on gold and silver to 6%, traders are anticipating increased market activity as these metals become more affordable and attractive to buyers.
• This move is likely to boost liquidity in the commodity markets, potentially leading to higher trading volumes and more dynamic price movements.
• Investors and traders will be closely monitoring the effects of these changes, looking for opportunities to capitalize on the expected volatility and trends in commodity prices.
• The budget's focus on making commodities like gold and silver cheaper could also influence the trading of other commodities, as market participants adjust their strategies in response to the shifting economic landscape.
• Overall, the budget 2024's impact on commodity trading is expected to be positive, with the potential to stimulate growth and activity in this sector.

Impact on overall market

• The budget for 2024 has far-reaching implications for the overall market, with its provisions set to influence various sectors and economic indicators.
• The reduction in customs duty on gold and silver is anticipated to have a ripple effect, potentially boosting consumer confidence and spending power.
• This move could lead to increased demand for luxury goods and services, signalling a positive trend for the retail and hospitality industries.
• Investors are likely to react positively to the budget's measures, which could lead to a surge in market optimism and potentially higher stock market indices.
• The budget's focus on making commodities cheaper may also lead to a decrease in input costs for businesses, which could translate into higher profit margins and investment in expansion.
• Overall, the budget 2024 is expected to have a stimulating effect on the market, with its strategies aimed at fostering economic growth and job creation.

Way Ahead

Looking ahead, the changes introduced in the budget for 2024 regarding gold, silver, and commodity trading are expected to pave the way for a more dynamic and accessible market. With reduced customs duties making these precious metals cheaper, the focus now shifts to how traders, investors, and consumers will respond to these new opportunities. The market is likely to see increased activity as participants adjust to the new economic environment. The way forward will involve closely monitoring the impact of these changes on market trends, consumer behaviour, and overall economic growth.

Conclusion

The reduction in customs duty on gold and silver is a significant step towards making these precious metals more accessible and affordable to the Indian public. While the immediate impact is likely to be a decrease in prices, the long-term effects will depend on various factors including global market trends and economic conditions. The budget's measures are expected to stimulate demand, boost the jewellery industry, and contribute to overall economic growth. Overall, these changes set the stage for a more dynamic and active precious metals market.