Gold and Silver Prices Rally on Import Duty Hike; Outlook Constructive

Gold and silver prices are rallying in the domestic market due to the sudden hike in import duties. In the coming days they are expected to align closer to the international prices, says Vedika Narvekar, Research Analyst - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.

Gold and silver posted a strong rebound last week as easing oil prices, softer Treasury yields and a weaker US dollar revived buying interest across global markets. International spot gold rose nearly 2% to around $4,740/oz, marking its strongest weekly gain in months while silver closed nearly 6% and extended its breakout rally this week climbing close to $86/oz. Unlike previous rallies, this move in Gold was driven less by panic safe-haven demand and more by shifting expectations around inflation and interest rates. The broader macro picture also improved slightly for gold after months of pressure from rising oil prices and elevated yields. Global physically backed gold ETFs recorded inflows of $6.6 billion in April after heavy outflows in March, taking total holdings to 4,137 tonnes, the third-highest level on record. Central bank buying also remained strong, continuing to provide a solid floor to prices. Meanwhile, silver continued outperforming gold, supported by a structural supply deficit and strong industrial demand linked to clean energy and electronics.

Markets are once again focused on inflation and interest rates. US CPI data came in hotter than expected, although not severe enough to trigger panic around aggressive Fed tightening. Inflation pressures remain elevated in food, energy and services, keeping Treasury yields and the dollar relatively firm. Markets are also closely watching the Trump-Xi meeting this week, as discussions around Iran sanctions, trade and technology could influence broader commodity sentiment and global risk appetite.

In a surprise move today, India sharply increased import duty on gold and silver to 15% from 6%. The move triggered a huge spike in domestic prices, with MCX gold briefly crossing ₹1.64 lakh per 10 grams and silver touching ₹3 lakh/kg before some profit booking emerged. The decision came amid concerns over rising gold imports, pressure on the rupee and elevated crude oil import costs. By raising duties, the government aims to curb excessive bullion imports, reduce dollar outflows and manage pressure on the current account deficit.

Technical Levels & Near-Term Outlook

Gold (Spot) CMP: $4,710/oz Support: $4,450 / $4,400 Resistance: $4,850 / $5,000

MCX Gold CMP: ₹1,62,570 Support: ₹1,53,500 / ₹1,52,000 Resistance: ₹1,67,500 / ₹1,72,000

Overall, gold remains in a near-term consolidation phase as markets balance sticky inflation and higher yield expectations against strong ETF inflows and central bank demand. Once domestic prices fully absorb the revised duty structure, MCX prices are expected to realign more closely with international trends. While upside may remain capped in the short term due to elevated yields and Fed uncertainty, the broader outlook for gold remains constructive.

Silver Outlook Silver continues to outperform globally and remains structurally stronger than gold. International silver prices are already up nearly 11% over the past week and are currently trading near $86/oz after breaking above the key $84 resistance zone. The rally continues to be supported by supply deficits and strong industrial demand forecasts.

International Silver CMP: $86.70/oz Support: $80 / $78 Resistance: $90 / $92

MCX Silver CMP: ₹2,96,770 Support: ₹2,74,000 / ₹2,67,000 Resistance: ₹3,08,000 / ₹3,15,000

Despite near-term volatility, silver continues to hold strong long-term buying potential supported by both industrial and investment demand.