extended gains on Wednesday, with domestic futures crossing the ₹1.63 lakh mark on the , supported by geopolitical tensions, a record low in the rupee, and continued safe-haven buying. MCX Gold opened with a sharp gap-up and traded above ₹1,63,000 after breaking out of a medium-term consolidation range, while COMEX Gold hovered near the $4,700-$4,730 per ounce zone.
The rally in domestic bullion was further amplified after the Indian government raised the total import duty on gold and silver to 15 per cent from 6 per cent. Market participants said the higher levy could push up local prices further even as international bullion prices remain volatile.
According to Nirpendra Yadav, Senior Commodity Research Analyst at Bonanza, the increase in import duty directly raises the landed cost of bullion in the domestic market as India imports most of its gold and silver requirements. He said MCX gold and silver prices reacted sharply because domestic bullion started trading at a bigger premium over international COMEX and LBMA prices, with futures contracts quickly adjusting to reflect the higher import cost.
“‘MCX pricing formula roughly works like: International Price + USD/INR + Import Duty + Taxes + Premium, so even if COMEX gold remains stable, a customs duty hike alone can push MCX prices higher,’ Yadav said. He added that while higher prices could lead to some profit booking and demand destruction in the short term, domestic premiums and arbitrage opportunities between MCX and COMEX are likely to remain elevated. Over the medium term, higher customs duty may reduce official bullion imports, support the rupee and current account deficit, but could also increase the risk of smuggling.”
The rupee weakened 32 paise to close at a fresh all-time low of 95.63 against the US dollar after trading in the 95.43-95.74 range intraday. Analysts expect the currency to trade with a weakening bias in the 95.45-95.90 band, with persistent dollar demand and geopolitical uncertainty continuing to pressure the domestic unit.
Sachin Sawrikar, Founder and Managing Partner, Artha Bharat Investment Managers, said, “The duty hike is understandable as a short-term signal, but it risks being a policy that looks good on paper and leaks badly in practice.”
Globally, sentiment remained cautious after the US April headline consumer price inflation came in at 3.8 per cent year-on-year, higher than the expected 3.7 per cent, while core inflation stood at 2.8 per cent against expectations of 2.7 per cent. The stronger-than-expected inflation print pushed the US 10-year bond yield higher to 4.47 per cent, limiting gains in precious metals overseas.
According to market analysts, COMEX Gold faces immediate resistance in the $4,780-$4,800 range, while support is placed at $4,670-$4,640. On MCX, resistance is seen near ₹1,64,000, with a sustained move above the level potentially opening the path towards ₹1,65,000-₹1,66,000.
Silver prices also remained firm. MCX Silver traded above ₹2,95,000 after breaking key resistance levels, while COMEX Silver held in the $87-$88 range, supported by safe-haven demand and supply concerns.