Trump hand forces hike in gold lease rates for Indian jeweller

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Subscribe to enjoy similar stories. Jewellery makers in India may soon have to pay more to lease the yellow metal from banks, as US president Donald Trump's tariff rampage rattles intermediaries in the world bullion market. Authorized Indian banks importing gold from international banks such as JP Morgan, Citibank, HSBC and Standard Chartered on behalf of local jewellers are set to increase interest rates for so-called gold metal loans (GMLs), bankers and industry executives said.

"Interest rate on GML could be raised to 3-4% from the current 1.5-2% after 20 February, when clarity emerges on the tariff treatment of gold imports into the US," said Shekhar Bhandari, president and business head of Kotak Mahindra Bank, one of the 14 lenders authorized by the Reserve Bank of India to import gold and silver. International bullion banks are shifting gold vaults to the US in anticipation of sweeping tariff hikes by the Trump administration, industry executives said. Uncertainty over the tariff burden has tightened gold supply and increased logistics costs, which foreign banks are passing on to customers through higher lease rates by banks here.

This, in turn, is being passed on to jewellers in the form of higher interest rates. Interest rates on gold metal loans could be hiked depending on the bank to as much as 5-6% from 2.5-3% in "certain cases," another official from the bullion desk at a private bank confirmed. The rise in loan rate was confirmed by Saurabh Gadgil, chairman & managing director at PNG Jewellers, a listed firm.