Silver Price Surges 6% to ₹2.95 Lakhs Amid India's Import Duty Hike and Escalating Tensions in West Asia

Global Bullion Markets Supported by US Inflation Data and Geopolitical Tensions

Silver prices surged on Wednesday, 13 May, as investors reacted to India's decision to sharply increase import duties on precious metals. The move is aimed at curbing overseas purchases of precious metals and easing pressure on the country's foreign exchange reserves. The import tariffs on gold and silver have been raised to 15% from 6%.

As a result, silver prices on the Multi Commodity Exchange (MCX) hit their 6% upper circuit of ₹2,95,805 per kg, while gold prices also rallied, reaching their 6% upper circuit of ₹1,62,648 per 10 grams. Spot silver gained 1% to $87.40 per ounce, extending gains alongside gold, which remained firm near record levels. Spot gold stood at $4,713.39 per ounce as of 0100 GMT, while US gold futures for June delivery rose 0.7% to $4,721.80.

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

The decision by India to increase import duties on precious metals comes at a time when global bullion prices are already witnessing strong support from safe-haven demand. Investors have remained cautious amid uncertainty surrounding US monetary policy and escalating geopolitical tensions linked to the Iran conflict. Fresh US inflation data also played a key role in supporting bullion prices, with consumer inflation in the United States increasing further in April, recording its largest rise in three years.

Headline inflation rose to 3.8% year-on-year amid higher energy prices. Following the data release, investors pushed back expectations of any Federal Reserve rate cut until after December 2027, while the yield on the benchmark 10-year US Treasury note climbed to 4.47%. US Treasury yields moved higher as investors sought compensation for holding bonds amid concerns that elevated energy prices could keep inflation sticky.

Geopolitical tensions have remained a major driver for precious metals, with investors closely tracking developments surrounding Iran and the Strait of Hormuz, a key global oil shipping route. The tensions have kept commodity markets volatile, particularly because any disruption to oil supply routes could worsen inflation pressures globally. Although oil prices slipped slightly on Wednesday after three consecutive sessions of gains, investors continued favouring bullion as a hedge against uncertainty.

Brent crude hovered near $107, with investors awaiting developments on the fragile ceasefire in the Iran war, while U.S. President Donald Trump headed to China for a high-stakes summit with President Xi Jinping. Furthermore, US President Donald Trump said he did not think China's help would be necessary to end the conflict involving Iran, even as hopes for a lasting peace agreement remained uncertain. Meanwhile, US Treasury Secretary Scott Bessent said discussions between Trump and Chinese President Xi Jinping could include the Iran conflict and shipping security concerns.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline