Shares of Tata Group’s Titan Company Ltd. surged as much as 6 per cent after Finance Minister Nirmala Sitharaman announced a reduction in the customs duty on Gold, Silver and Platinum.
In the Budget, the Finance Minister announced a reduction on Basic Custom Duty on gold and silver from 10 percent to 6 percent. Adding 5 percent AIDC, which remains unchanged, the total import duty on Gold and Silver is reduced from 15 percent to 11 percent now.
Bhavik Patel, senior commodities analyst, Tradebulls Securities said, “The outlook of Gold looks strong despite import duty cut to 6 percent as with duty cut, it will make gold cheaper domestically which will increase the demand for physical gold.”
Jewellery firms such as PC Jeweller, Senco Gold, Thangamayil Jewellery and Titan clocked sharp gains in trade.
However, while physical gold might outperform, Jigar Trivedi, senior commodities analyst at Reliance Securities said that it might impact the demand for gold futures. MCX Gold August 5 futures sank over 2.5 percent in trade at 12.30 pm.
The cut in customs duty will also benefit the government as it will reduce smuggling of gold from the Middle East. The outlook for silver is also positive, but may not outperform gold in medium term, analysts said.
The immediate outlook for gold will primarily depend on path of US dollar and US interest rate. Market has already priced in September’s rate cut and once Fed starts on the path of cutting rates, both gold and silver has no other way but only to go up, added Patel.
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