Gold Demand Falls 70% After Duty Hike; What Lies Ahead for Gold and Silver Prices?

Added: 2026-06-02

[00:00:04]Hello and a warm welcome on Business Today television. We've been discussing equities for a while. This is as time as good a time as any to look at the commodities part of the world. And joining us on the show is Miss Wanda Bharti, a very well-known expert in the world of tracking precious metals as also crude oil. Uh a very warm welcome to you Wandana G. As always, it's a pleasure to host you, ma'am. What do you think of uh uh the way silver and silver and gold prices are reacting to uh when you look at prices at this point of time after the imposition of fresh duties on their import and a very sharp fall in actual demand?

[00:00:51]Uh yeah there is a sharp uh fall in actual demand and uh uh the appreciation recent uh appreciation in ironr it is uh limiting the upside of uh uh gold and silver and if we do the comparison between international market and domestic market for the time being because of the rupee because of the custom duty because of the restrictions uh domestic gold and silver they are decoupled with the international gold so Indian gold and silver they are having their own and physical gold and silver they are continuously trading on this count and since uh June, July, May these three months are considered as a dull uh physical demand season for India. So uh the uh range it is expected to continue for some time more and in international market like uh the tussle between the peace uh deal and again uh the attack uh so it is creating some kind of range for gold and silver both. So international market it is uh trading amid uncertaintity and uh domestic market it is trading under pressure of uh uh import restrictions and all. So yes, the discount is likely to continue in spot market and futures market. They are still trading on some premium.

[00:02:09]>> Okay. Now uh let me just put all of this in context. What has happened over the last fortnight is after Prime Minister Narendra Modi has appealed to the nation not to buy gold uh for at least a year to save precious foreign exchange, demand has plummeted across the board.

[00:02:28]The physical demand for gold has gone down at jewelry shops in the bullan market and that has had a negative impact on price. Ditto for silver as well. At the same point of time, uh the RBI has taken steps to keep the fall of the rupee under control. In fact, the rupee has appreciated. These are two short-term negatives that the domestic gold prices are now facing. Pana G because uh you keep track of the physical market as well. There are news reports coming in that given the high duty differential between domestic market in India and the Dubai market of gold in the Middle East.

[00:03:16]A lot of gold is coming in without paying customs duties. What is the evidence that you have gathered from the physical market of gold uh in Delhi and Bombay?

[00:03:29]>> It happened mostly whenever we uh find that the custom duty it is above 10%.

[00:03:36]There is a case of around unofficial import of uh gold uh and the number is around 20 to 25%. If we >> okay uh >> uh if we uh give the historic data even uh custom duty uh hike it doesn't uh reflect uh it it doesn't give the impact much on the gold physical demand because in time of 2022 2024 the import duty was on higher side but yes the physical demand was also on higher side and so is the import of gold but yes we have imported more via the unofficial channel. So it is almost it is it is evident it is evident in case of the central banks buying in international market many many major banks they have uh bought u unofficial gold they have created a reserve for gold.

[00:04:28]>> Okay. So ladies and gentlemen when Indian customs duties are higher and the government has imposed higher customs duty to prevent uh uh larger gold imports. Now what happens is domestic prices rise >> in sync with the rise in customs duty but international prices of gold are still low. So this is the gap that unauthorized and uh uh smuggled gold brings in. So what news reports we are hearing is that in physical market a lot of gold is coming in without paying customs duty and that difference is what Vanagi is referring to anywhere between 18 lakh to 22 lak rupees per kilo gold that's the clean profit that people who are able to do this are making be that as it may that is not something that concerns us nevertheless impacts markets Now let us shift our focus Vandrahan G on silver. What are the charts of silver the physical demand for this metal and the general sentiment telling you about prices?

[00:05:42]>> Uh we uh we have started uh getting the bad data from major economies be it GDP of uh US it was 1.6% and expectation was 2%. And if we consider the great trade data and uh other datas manufacturing data now uh the impact of war is coming on the data of major uh economies including US which was uh uh till now it was untouched by the war to some extent but yes because of that negative data and sentiments s in silver we have seen a decline in the prices but yes $70 is a very good support for this commodity and the critical ical uh like the demand for the silver in case of arms making and uh like uh in uh AI and in uh uh we can say that EVs and all. So the demand is a type of essential type of demand is there for silver. Because of that we can see a limited downside and it is 70 to $68 kind of level in international market because if we see some kind of deescalation then it will see the sharper rise on higher side and it may touch the level of $85 to $88. So the uh downside risk is minimum here while the out upside risk upside potential is more. And if we consider the domestic market, we are expecting a fall of around 2 lakh 60,000 2 lakh 50,000 on lower side in silver prices. Once the deescalation happens, we may see a level of around 2 lakh 80,000 to 2 lakh 90,000 in silver.

[00:07:22]So we are expecting a limited fall in silver prices.

[00:07:26]>> Okay. Uh with these two precious metals out of the way, uh Vander, we had a very very strong rally in uh uh Ferris.

[00:07:38]Steel is doing extremely well in the markets. Uh what is your view on uh how global steel oil steel prices are behaving especially hot rolled and cold rolled? What are the basis of that jump in prices? because uh we see record highs on steel authority JSW steel, Jindel steel and power, Tata steel, many of these uh uh integrated steel producers are uh rising very rapidly in the equity markets. What is the underlying theme?

[00:08:12]>> Uh I can't say that this is the actual demand for ferrris or non-ferris. It is uh giving the actual rally to these metals. But yes I can say that the urge to create a strategic reserve for ferrris and non-ferris metals it is important for the market many sport uh export restrictions be it Indonesia China and other countries market is expecting a rally in this commodity and uh we know the story of sulfuric acid and all and to safeguard the uh need of market demand of market many countries they are importing more or they have restricted the expos quote uh because of that we have seen the prices on higher side but yes some demand exclusion is there and we are we are expecting there is there should be a rise of around 5 to 8% in steel further >> okay fair point uh let's also shift focus to uh the other commodity that is attracting global attention and that is crude oil prices van uh what are the charts telling you till about mid of last week uh there was a clear and distinct breakdown in prices uh on charts but somehow they seem to have been revived. What is your view on crude oil?

[00:09:30]>> Yeah, if you want to trade any equity or commodity first you need to see the crude chart where the nifty will open it is decided by crude only these days.

[00:09:40]So uh crude oil uh it is decoupled from the uh physical market because if we consider the Indian crude basket it is above 1025.

[00:09:49]If we consider the brand prices it is $9192.

[00:09:53]So the complete decoupling is there in the between the spot market and the derivative market because US is pressurizing the crude prices. Earlier it was in the case of silver prices clearly because these two are very important commodity midterm election is there. So USL want to keep the prices lid on the prices. But yes, the downside is now limited. Now we are in the territory where crude has made already the higher highs and higher lows to $85 to $82. This is the major support for this commodity and I'm expecting that from there we can see a level of around uh 9295 kind of dollar if this escalation goes on and uh market is expecting a 60 days of ceasefire uh desperately and because of that we have seen a limited uh crude oil upside in crude oil prices but yes in this week if they prolong this uh confusion in the market we can see a level of around 92 to 94 in crude oil prices because uh uh like uh inventories are on record low.

[00:10:58]So that is a concern for the market.

[00:11:00]Till the time the major economies they were relying on inventories. Now it is on the record low. So that is a concern for the market. It is deflating very fast.

[00:11:11]>> Fair point.

[00:11:13]I wish it would deflate a little further and a lot faster. Uh let's hope that happens. Uh finally Van G let's look at the softs market uh on the agri space. Uh any signs of strength in sugar and coffee?

[00:11:31]>> Uh sugar uh government has um taken this means like u uh steps to safeguard this market. But uh if we consider the international market uh it is uh correcting for the time being. But yes, we can see a level of around 1,500 to 1525 in international market because this is something related to the ethanol and the crude oil prices. So ultimately we are not going to see a much downside in sugar prices. Still the oil crisis it persists like many countries they will increase the blending of ethanol in the crude oil prices. This is another way to uh keep the prices on d uh lower side.

[00:12:14]If you consider the coffee prices, uh it is a concern for the uh consumer as well because uh we have seen a strong rally in coffee prices few uh last year as well and it was on the record higher price for there we have seen a decline but now the downside is limited right now and expecting the level of 24,000 on lower side and uh since the like market is waiting for uh cold season, winter season and all. From there we can see a rally of around 32,000.

[00:12:50]>> Okay. Uh anything else in the world of commodities that you would like to highlight which I may have missed.

[00:12:56]>> I will suggest natural gas because natural gas it is very normal. It is trading in a range and it is it is trading on the basis of basis of seasonality. So this commodity it has given very good upside and I'm expecting $4 kind of level in international market and since we are hitting towards the uh like um cooling demand period to cooling demand period so in international market in NYX I'm expecting $3.6 uh my first target second is $4. If you consider the Indian market 330 is the next uh target level for this commodity and expect 360 level in this commodity.

[00:13:35]So this commodity is giving a stable and uh higher upside.

[00:13:42]>> Okay. Uh on that note uh uh Wra we'll call it time. As always it's such a pleasure listening to your views and we hope to get back together again.

[00:13:54]That ladies and gentlemen was Miss Wandana Bharti a very well-known commodities analyst at SMC Global Securities. Thank you for watching and please continue with business today telev.

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