Bullion bears brace for pain as duty hike to lock gold, silver at upper circuits on MCX

Subscribe to enjoy similar stories.MUMBAI: Bears in gold and silver are in for a rude shock after the government raised import duty on bullion to 15% from 6%, a move expected to send prices on the Multi Commodity Exchange (MCX) soaring by more than 9% and potentially lock contracts at upper circuits.Gold and silver contracts on MCX have a maximum daily price limit of 9% in either direction. If international prices move beyond those levels, the exchange can relax the circuit limits in additional 3% bands.The government on Wednesday raised import duties on gold and silver as part of efforts to curb precious metals imports amid a swelling import bill triggered by the West Asia crisis.The duty hike comes days after Prime Minister Narendra Modi urged citizens to defer gold purchases for a year to help cushion the economic impact of the West Asia war.India imports about 700 tonnes of gold annually, putting pressure on the current account deficit (CAD) at a time when the conflict has driven crude oil prices up 45% to above $107 a barrel.CAD reflects the gap between the country’s foreign exchange earnings and spending.

India typically runs a deficit because it imports far more crude oil and gold than it exports. A wider CAD raises demand for dollars to pay for imports, often putting pressure on the rupee.In FY26, India’s gold imports accounted for 9.3% of the total import bill.Meanwhile, investors holding gold and silver exchange-traded funds (ETFs) are likely to book profits, which could result in gains in ETF prices trailing the sharp rise in futures prices, said Satish Dondapati, fund manager at Kotak Mahindra Asset Management Company.Unlike ETFs, derivatives can be both bought and short-sold without owning the underlying