Gold and silver prices surged across domestic futures and physical markets on Wednesday after the Centre raised import duties on the two precious metals, jolting traders, jewellers and investors already navigating elevated global prices and wider economic uncertainty.Silver hit the 6 per cent upper circuit on the Multi Commodity Exchange, touching about ₹2,95,805 per kg, while gold also moved to its upper limit near ₹1,62,648 per 10 grams in early trade. Other market readings showed bullion futures pushing even higher as liquidity tightened and traders rushed to reprice contracts after the duty increase took effect.
New Delhi raised the import duty on gold and silver to 15 per cent from 6 per cent, with the new structure comprising 10 per cent basic customs duty and 5 per cent Agriculture Infrastructure and Development Cess. The move is aimed at curbing imports, reducing pressure on foreign exchange reserves, narrowing the trade deficit and supporting the rupee at a time when higher crude oil prices and bullion purchases are adding strain to external balances.
Bullion dealers said the immediate effect was a sharp reset in landed costs, forcing wholesalers and jewellers to revise prices before fresh supplies could be absorbed. The policy shift widened the gap between domestic and international prices, raising concerns that legal imports could slow sharply in the weeks ahead. Jewellers are also expected to face resistance from retail buyers as higher prices filter into ornaments, coins and investment bars.
Gold demand has remained resilient despite record prices, supported by portfolio diversification, weak risk appetite in equities and the cultural weight of bullion in savings and weddings. That strength has complicated policy choices, as precious metal imports account for a sizeable share of foreign exchange outflow. A higher tariff may cool discretionary purchases, but it also risks reviving unofficial channels if the price gap becomes large enough to make smuggling profitable.
Silver’s rally was sharper because the metal has a dual role as both investment asset and industrial input. Demand from electronics, solar equipment, electric vehicles and other manufacturing segments has kept the silver market tight, while retail investors have turned to it as a lower-ticket alternative to gold. A 6 per cent circuit move reflected not only the tax shock but also concerns over availability and replacement costs.
Global market conditions added to the pressure. US consumer inflation for April rose 3.8 per cent from a year earlier, with core inflation also firming, reducing expectations of early Federal Reserve rate cuts. Stronger inflation usually creates competing forces for gold: higher rates and a stronger dollar can weigh on prices, while inflation anxiety and geopolitical risk tend to support safe-haven buying.
West Asia tensions have kept energy markets unsettled and reinforced demand for defensive assets. Any prolonged disruption to oil flows would carry particular implications for the country’s trade balance, as crude imports remain one of the largest components of external payments. Higher oil and bullion bills together can pressure the rupee, widen the current account deficit and complicate monetary management.
Spot gold in global trade hovered near $4,700 an ounce on Wednesday, while silver also remained elevated despite some pressure from firmer US data. Domestic futures, however, outperformed the international market because the tariff change directly increased import parity prices.
Market participants expect volatility to remain high until traders assess how banks, refiners and nominated agencies respond to the new duty regime. Importers may delay fresh orders, while jewellers could rely on existing inventory to manage near-term demand. Consumers, especially wedding buyers, may split purchases or shift to lower-weight designs if prices remain elevated.
The policy also creates a test for financial gold products. Exchange-traded funds and sovereign gold-linked instruments have gained attention as investors seek exposure without handling physical metal. Higher duties can make domestic prices more attractive for holders of existing bullion-linked assets, but fresh buyers face a steeper entry point.
Shares of jewellery retailers may come under pressure if demand weakens, though large organised players could benefit if consumers prefer trusted supply chains during periods of price disruption. Smaller jewellers may face tighter margins because passing on the full duty-led increase can reduce footfall.