Gold Market Reacts Positively to Government's Import Duty Cut

Government's Decision to Reduce Base Import Prices Boosts Jewellery Sector

Shares of jewellery companies surged in response to the government's decision to reduce base import prices for gold and silver, resulting in a significant boost to sentiment across the sector. Senco Gold saw its shares jump 11.01% to Rs 320.60, while Kalyan Jewellers gained 5.40% to Rs 415.65, as lower import prices are expected to ease input costs and support margins.

According to a recent report by the Informist, the Centre has reduced the base import price of silver to $2,427 per kg (Rs 2,26,096/kg) from $2,820, and lowered the gold's base import price to $1,526 per 10 gm (Rs 1,42,223) from $1,652 per 10 gm. This decision is seen as positive for jewellers as it lowers procurement costs, improves inventory economics, and could support demand by making precious metals relatively cheaper for consumers.

The latest move by the Centre comes amid geopolitical turbulence, with bullion initially experiencing losses before rebounding to trade near $4,630 an ounce. The rebound is attributed to reports of the United States, Iran, and regional mediators working on terms for a potential 45-day ceasefire that could pave the way for an end to the conflict.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The situation remains tense, with Donald Trump warning of severe consequences for Iran if it failed to reopen the Strait of Hormuz. Iran has rejected this demand, leading to ongoing hostilities. The key shipping route between Iran and the Arabian Peninsula has remained largely shut since hostilities escalated in late February.