India's Gold Market Sees Sharp Divergence from Global Prices Amid Duty Cut Uncertainty

India's gold market is experiencing a sharp divergence from global prices as buyers hold off on purchases, waiting for clarity on potential import duty cuts. On August 27, gold and silver prices in India fell despite higher global bullion rates. The discussion within the central government about reducing duties on precious metals has sparked a wait-and-watch approach among physical buyers.

The current import duty of 15% is being pushed to be reduced to 6%, according to sources close to Moneycontrol. However, no final decision has been taken yet. This uncertainty has led to a widening discount on domestic gold and silver prices in India.

On the Multi Commodity Exchange (MCX), gold futures for October were trading at Rs 1.58 lakh per 10 grams, down 0.8%, while silver futures for September were at Rs 2.38 lakh per kg, down 0.2%. In contrast, spot gold was up 0.8% at $4,630.09 an ounce, and US gold futures gained 0.7% to $4,685.50.