Modi government cuts base import prices of gold and silver
What's the story
The Indian government has reduced the base import prices of gold and silver. The price of gold has been reduced by $11 per 10gm, now priced at $927 per 10gm. Likewise, the base import price of silver has been cut by $18 per kilogram to $1,025 per kilogram. The adjustments are part of regular fortnightly revisions based on market trends and dollar index.
Market influence
Impact of dollar index and profit-taking on gold prices
The fall in gold prices is largely attributed to a rebound in the dollar index and subsequent profit-taking. The development comes after a period of selling pressure on the yellow metal. The government's decision to revise base import prices reflects these market dynamics, demonstrating how external factors can influence domestic pricing strategies for precious metals like gold and silver.
Global influence
India's import policies significantly impact global precious metal markets
India's status as the world's largest silver importer and second-largest gold consumer gives it a strong influence over global precious metal markets. The base import prices are important for determining the duty on gold and silver imports into India. The government's move to revise these prices every fortnight ensures that they are in line with current market conditions, keeping them relevant in international trade discussions.
Market reaction
Gold futures rise amid spot demand
Following the government's decision, gold prices surged by ₹478 to ₹84,697 per 10gm in futures trade on Monday. The increase was attributed to speculators creating new positions on the back of firm spot demand. On the Multi Commodity Exchange, April delivery gold contracts traded higher by ₹478 or 0.57% at ₹84,697 per 10gm in a business turnover of 13,686 lots.