Gold Rate in India Sees Massive Single-Day Jump Post Tariff Hike; Will Prices Fall Today? May 14 Outlook

Gold Rate in India: Prices of 24 karat, 22 karat, and 18 karat gold in India witnessed their biggest-ever surge on Wednesday, May 13, after the Indian government raised import tariffs on gold and silver. Silver prices in India also mirrored the trend and saw a sharp rally during the session. As markets gear up for Thursday's trading session, here's a look at the key factors and developments that could influence the trajectory of gold prices today.

Gold Rate in India

The 24 karat gold rate in India today increased by Rs 1,391 per gram to Rs 16,789 per gram, as per Goodreturns data at 11 am on Wednesday. However, domestic 24 karat gold rate in India saw some correction in the second half and stood at Rs 16,200. The price of 22 karat gold in India surged by Rs 1,275 per gram to Rs 15,390 per gram. However, the precious metal also saw some correction and its price stood at Rs 14,850 per gram. The rate of 18 karat gold in India stood at Rs 12,150 per gram.

Gold Price Outlook

Gold prices in India are likely to remain volatile after Wednesday's sharp surge. The precious metal could face some downward pressure if the Indian Rupee recovers following its weakness over the past two sessions. However, gold prices may continue to see upward momentum if the Rupee remains weak and due to the impact of the recent hike in gold import duties.

"An increase in import duties on gold and silver often has an almost immediate beneficial effect on domestic prices because India imports the majority of its metal needs. The government's announced rise in tariffs from 6% to 15% substantially boosts the landing cost of imported gold and silver for banks, bullion dealers, and jewelers," Ruchit Thakur, Market Analyst, VT Markets.

"Short-term market reactions would be bullish for domestic bullion prices; gold and silver in India may temporarily outperform international prices due to the additional duty premium; demand for jewelry may slow as higher prices may negatively impact wedding demand, retail jewelry purchases, and small-ticket buyers; inflows may occur, especially in price-sensitive markets like ETFs and digital gold; and some investors may switch from physical jewelry to gold ETFs, silver ETFs, and digital bullion due to higher manufacturing fees and taxes," the expert added.

The domestic currency's performance, policy restrictions, volatility in the international gold rates will remain the key trigger for domestic gold prices." The movement of the rupee, the government's position on more restrictions, the slowdown in physical demand, the global gold trend, the US Fed's standpoint, and premiums in Indian spot markets might all be major future triggers," added Thakur.

In the long-term international gold prices are likely to remain firm due to continued safe-haven demand. "Strong global safe-haven demand and central bank purchases are expected to keep international prices firm, widening the gap between global and domestic rates. Over time, higher duties may ease pressure on the rupee, but policymakers will need to balance reserve protection against the risk of weaker consumption and increased domestic price volatility," explained Rajeev Sharan, Head of Research, Brickwork Ratings.