Union Budget 2024: Gold and silver prices to come down as custom duty slashed to 6%

July 26, 2024

Whether you were planning to invest in gold or just buying it because you love to wear gold jewellery, you must wait a bit. The gold prices will decrease, but when?

The Union Budget 2024 has been announced and has brought important good news for all smart investors and those who love buying gold and silver jewellery. Called a strategic move, this statement aims to boost the economy and make precious metals more accessible. The government of India has announced a reduction in custom duty on gold and silver to 6% which earlier was 15%. This is a big declaration that may bring down the gold rates in 2024. This decision is expected to have far-reaching effects on the prices of these precious metals and the broader economic landscape.

Let’s, now find out why this reduction in custom duty can reduce the gold rates.

Why Does the Custom Duty Cut Matter?

It is important to tell you that custom duty is a key component in calculating the final price of imported goods, including gold and silver. By reducing this duty from its previous levels i.e. 15% to 6%, the government aims to lower the overall cost of these metals. This move is particularly significant in a country like India, where gold and silver hold immense cultural and economic importance.

What is its Impact on Gold Prices?

Gold has always been a prized possession in Indian households, symbolising wealth and prosperity. With the reduction in customs duty, the price of gold is expected to decrease, making it more affordable for consumers. This is particularly beneficial for those planning weddings or other significant events where gold jewellery is a must-have.

Lower gold prices will also likely boost investment in gold. Many Indians view gold as a safe-haven asset, and reduced prices could lead to increased buying, both in physical form and through financial instruments like gold ETFs (Exchange-Traded Funds)

What is its Impact on Silver Prices?

Silver, often considered the affordable replacement for gold, is also set to become more affordable. This metal is widely used not only in jewellery but also in various industrial applications, including electronics and solar energy. The reduction in customs duty will make silver cheaper, potentially spurring demand in both the consumer and industrial sectors.

Economic Implications

More Gold for Your Money

The custom duty cut is expected to have several positive ripple effects on the economy:

Boost to the Jewellery Industry: Lower prices for gold and silver will likely lead to increased demand for jewellery, providing a much-needed boost to the jewellery industry. This could translate to more business for local jewellers and increased employment in the sector.
Increased Consumer Spending: With more disposable income available due to lower gold and silver prices, consumers might be inclined to spend more on other goods and services, thus stimulating economic growth.
Investment in Precious Metals: Lower prices could attract more investment in gold and silver, both from domestic and international investors. This influx of investment can provide additional stability to the economy.
Industrial Growth: Reduced silver prices can lower the cost of production for industries relying on this metal, particularly in electronics and renewable energy sectors. This could make Indian products more competitive globally.

Challenges Ahead

While the reduction in customs duty is a welcome move, it also presents certain challenges. The government will need to balance the potential increase in imports with domestic production to avoid any negative impact on the trade deficit. Additionally, ensuring that the benefits of the duty cut are passed on to consumers without undue profiteering by middlemen will be crucial.

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Wrapping Up

So, we can say that the Union Budget 2024’s decision to slash customs duty on gold and silver to 6% is a strategic move that promises to make these precious metals more affordable and stimulate economic growth. This initiative is likely to have positive effects on the jewellery industry, consumer spending, and industrial production, while also encouraging investment in gold and silver. As the new duty rates come into effect, both consumers and the economy stand to gain from this forward-thinking policy.

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