Gold costs fell for the second consecutive session on Tuesday. On MCX, gold April futures had been observed trading at Rs 48,380 per 10 gram, down Rs 340 or .70 per cent. While silver March futures plunged Rs 1,835 or 2.49 per cent to Rs 71,831 per kg on Multi Commodity Exchange. On the Budget day, Finance Minister Nirmala Sitharaman announced to reduce base customs duty gold and silver costs, and imposed a 2.5 per cent agriculture infrastructure and improvement cess. The customs duty on gold and silver has been lowered to 7.5 per cent.
In one more announcement, the government mentioned that capital market place regulator Securities and Exchange Board of India (Sebi) will be the designated regulator for gold exchanges which will infuse transparency in gold transactions. Gold had fallen from Rs 49,570 per 10 gram to Rs 47,201, a fall of Rs 2,369 or 4.77 per cent when custom duty was lowered in the spending budget. Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told TheSpuzz Online, that, nonetheless, gold has managed to recover most of its losses and on the closing basis, it was half a per cent down as compared to 28th Jan costs. Most of the commodity specialists hailed the reduce in customs duty announcement, as they think that this step will encourage more gold shopping for amongst prospects.
COMEX gold was trading small changed close to $1865/oz right after a .7 per cent acquire yesterday. Ravindra Rao, VP- Head Commodity Research at Kotak Securities, mentioned that the gold is choppy amid mixed trade in the US dollar index and as market place players assess the possibility of a US stimulus deal. “Support from rising virus cases, uneven global economic recovery and hopes of higher Indian demand is countered by continuing ETF outflows which show weaker investor interest,” he added. Gold may possibly continue to witness mixed trade reflecting mixed trends in the US dollar but common bias may possibly be on the upside owing to international development worries and possibility of US stimulus. “Domestic gold prices have become cheaper due to duty cut; however, the general price trend will be determined by international markets,” Rao mentioned.
Patel also added that silver was trading at 6-month higher as retail traders had been seeking for a quick squeeze. While gold has gained moderately, silver hogged all the limelight. “To be honest, silver was languishing behind its big brother Gold and also did not move up compared to other base metals like Copper and Nickel,” he added. So, this move was due but the pace of the move has shocked all. “Investors are piling into physical, ETFs, and mining as on Friday the iShare Silver Trust (SLV), world’s biggest silver-based Exchange Traded Fund recorded one day inflow of almost $1 billion. Patel also mentioned that silver is no longer low-cost when it was trading in the variety of $25-$26 as Gold/Silver ratio has come down about 63 to 74. Now investors have to have to trade cautiously as such wild moves can be tricky to predict.