Gold, silver premiums in India surge on import duty hike bets
MUMBAI (January 21) Gold premiums in India surged past $100 an ounce on Wednesday for the first time in more than a decade, with silver premiums at a record high, as traders priced in possible curbs on precious metals imports to shore up the rupee.
Bullion dealers charged a premium of up to $112 per ounce over official domestic gold prices – inclusive of 6% import and 3% sales levies – the highest since May 2014. Last week, dealers offered a discount of up to $12.
Silver premiums surged to $8 per ounce, surpassing the previous peak of $5 scaled in October.
India is the world's second-largest consumer of gold and the largest consumer of silver. The rupee slipped to a record low of 91.7425 against the U.S. dollar on Wednesday.
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"People are speculating that the government may raise import duties on gold and silver to curb imports in the budget," said Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold.
"Anticipating the hike, traders are charging premiums over record prices."
Finance Minister Nirmala Sitharaman is set to present the Union Budget for 2026/27 on February 1. She had slashed import duties on gold and silver to 6% from 15% in July 2024 to curb smuggling.
India meets most of its gold and silver demand through imports, which have surged in recent months, widening the trade deficit and putting pressure on the rupee .
Local gold prices soared to an all-time high of 158,339 rupees per 10 grams, while silver surged to a record 335,521 rupees per kilogram.
"Traders with short positions were squeezed as prices rose, forcing them to buy to close their positions," said Prithviraj Kothari, president, India Bullion and Jewellers Association (IBJA).
While jewellery demand is down, investment in coins, bars, and exchange-traded funds has surged, Kothari said.
"Supply hasn't kept up. This shortage is causing sellers to charge higher premiums," said Chirag Thakkar, chief executive of Amrapali Group Gujarat, a leading importer.
The industry is concerned that the government may take steps to restrict bank funding currently used by jewellers for gold and silver imports, a move that is also lifting premiums on both metals, said Surendra Mehta, secretary, IBJA.
India's Ministry of Commerce and Industry did not immediately respond to a Reuters request for comment.
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