Oman gold prices become more attractive after India duty hike

July 5, 2022

Muscat – Indian government’s recent announcement to raise import duty on gold is expected to make the yellow metal more expensive in India but the decision will make gold prices more attractive in the GCC countries, benefiting Indian expatriates and visitors in the region.

Effective July 1, India raised the basic import duty on gold from 7.5 per cent to 12.5 per cent, a measure to discourage gold imports amidst the country’s widening trade deficit and weakening rupee.

Industry experts believe that that the hike in import duty in India can make gold prices between 12-15 per cent cheaper in the GCC compared to the Indian prices.

‘The recent announcement by Indian government to raise import duty to 12.5 per cent from 7.5 per cent is expected to make gold more expensive across India. This hike has increased the gold price difference between the GCC and India. The gold price in GCC will get more attractive than in India with a saving of 12 -15 per cent. The weakening rupee will further increase the gold rates in India,” said Shamlal Ahamed, MD – international operations, Malabar Gold & Diamonds.

After the announcement of import duty hike, gold prices saw a steep rise of more than 2 per cent on Friday on the Multi Commodity Exchange of India (MCX). On Monday, gold prices in India further extended their gains by 0.5 on the MCX.

Gold prices in India’s physical markets rose by over Rs900 on Friday, and by another Rs500 on Monday to Rs52,340 per 10 grams (approximately RO25.5 per gram), data from India Bullion and Jewellers Association showed, as reported by ANI.

Commenting on prices in the GCC markets, Ahamed said gold prices have reduced to ‘consumer-friendly’ levels in the GCC and it is the perfect time for customers to make use of this opportunity to benefit from the gold rates ahead of the holiday season.

“We are also expecting tourists from India to increase their jewellery purchases during their visit (to GCC countries). The price advantage here will further enhance the bridal jewellery purchases from residents and tourists alike,” he said.

Gold prices in Muscat stood at RO22.250 per gram for 22 carat and RO23.200 per gram for 24 carat in the afternoon on Monday.

According to an ANI report published on Monday, India’s Union Finance Minister Nirmala Sitharaman said that the customs duty on gold has been increased to discourage the high import of gold into the country.

“There has been a sudden surge in imports of gold. In the month of May, a total of 107 tonnes of gold was imported and in June also the imports have been significant. The surge in gold imports is putting pressure on the current account deficit,” a statement by India’s Ministry of Finance said.

The gold prices (in India) are on the verge of retesting its recent high of Rs55,000 – Rs56,000 per 10 gram in the medium term – by end of 2022 – on account of higher import duty, weakness in Indian rupee and likelihood of a recession in the US, said Ajay Kedia, head of Mumbai-based advisory firm Kedia Advisory, ANI reported.


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