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GOLD Prices in India
Gold prices remained steady on Tuesday as investors awaited U.S. economic data for insights on the Federal Reserve’s interest rate cut timeline. Spot gold was nearly unchanged at $2,396.57 per ounce as of 0458 GMT, while U.S. gold futures rose 0.1% to $2,398.00.
Traders are looking forward to the second-quarter gross domestic product (GDP) report on Thursday and personal consumption expenditures (PCE) data for June on Friday. Matt Simpson, a senior analyst at City Index, commented, “Gold looks quite comfortable around $2,400 for now, so there is the chance of a minor bounce heading into GDP.” He added that even if growth surprises to the upside, gold is likely to hold above $2,360 in the current environment.
Gold price at all time high
Last week, gold prices reached an all-time high of $2,483.60, with markets broadly expecting a 25-basis-point U.S. rate cut by September. the rate slightly decrease the opportunity cost of holding bullion.
On the political front, U.S. Vice President Kamala Harris is set to campaign in Wisconsin for the first time as a presidential candidate, having secured enough Democratic delegates for her nomination. In his acceptance of the Republican nomination, Donald Trump pledged to cut corporate taxes and interest rates, which could widen the U.S. federal budget deficit. Investors believe the deficit will continue to worsen under a second Democratic administration.
JP Morgan noted that while there is no clear pre-election commodities trade due to various potential scenarios, gold stands out as a favorable investment. They cited structurally bullish drivers such as concerns over fiscal debt, tariffs, trade retaliations, and America First rhetoric as factors likely to support gold prices.
In other precious metals, spot silver fell 0.7% to $28.98, platinum remained flat at $946.79, and palladium dropped 0.4% to $904.44.
According to the 2024 budget, the GST on gold in India remains significant for buyers and sellers. The GST rate on gold and gold jewelry is set at 3%. This is applied to both the value of the gold and the making charges. For making charges specifically, an additional 5% GST is levied (Paytm) (Bizpole).
New Budget 2024 :
Price Impact
The GST on making charges and the overall GST on gold have contributed to an increase in the cost of gold. This has impacted demand as the final price for consumers has risen (Bizpole).
Transparency and Compliance:
The implementation of GST has improved transparency in the gold market. All transactions need to be documented, ensuring better accountability from dealers (Bizpole).
Exemptions:
Licensed jewellery exporters are exempt from GST on gold purchases, which aims to boost the competitiveness of India’s gold export industry. They also have the option to avail a 2% input tax credit on production expenses (Paytm).
Free Trade Agreement:
Benefits such as the Free Trade Agreement with countries like South Korea allow GST-registered importers to import gold without an additional 5% customs duty (Bizpole).
These changes aim to create a more streamlined and competitive gold market while ensuring compliance and transparency. If you are involved in buying or selling gold, it’s crucial to stay updated on these regulations to navigate the market effectively.
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