Home / Markets / Commodities /  Gold rates today at life-time high after budget 2023 proposal. Buy or hold?

Gold rates today climbed to a new life-time high of 58,060 per 10 gm on Multi Commodity Exchange (MCX). Gold future contract for February 2023 started rising amid budget speech of Finance Minister Nirmala Sitharaman and went on to climb to its record high by the time FM finished her speech in the parliament. Highlighting the connect between the gold price rise and FM Sitharaman's budget speech, commodity market experts said that gold price today hit new high because of the budget proposals to increase the import duty on silver Dore, bars and articles to align them with that on gold and platinum.

On why gold prices are rallying today, Nirpendra Yadav, Senior Commodity Research Analyst, Swastika Investmart said, "The government of India increased the import duty on gold bars and gold Dore earlier this fiscal year to 12.5% and 11.85%. Now in the union budget for 2023, Government has decided to increase the duty on articles made therefrom to enhance the duty differential. Which will further increase the gold prices in the domestic market. And the increase of import duty on Silver Dore, bars and articles will support the silver prices in the near term. On the other hand, higher duty on precious metals will support the India Rupee."

Speaking on the reason for gold rates today climbing to a new all-time high, Anuj Gupta, Vice President — Research at IIFL Securities said, "Gold prices in domestic market are rising due to the new government of India's (GoI's) proposal to increase the import duty on silver Dore, bars and articles to align them with that on gold and platinum. The budget proposal has gone down well among the bullion market participants and the rally in precious yellow metal may further continue as US Fed officials are also dropping hint to go slow on interest rate hike. "

Anuj Gupta of IIFL Securities advised gold investors to hold further as gold prices are expected to go up to 58,500 per 10 gm levels in immediate short term. He said that in medium term, gold price is expected to hit 60,000 in domestic market as the budget proposal is going to boost demand of physical gold in the domestic market leading to demand supply constraint for the precious commodity.

Predicting profit booking on higher levels, market expert Sugandha Sachdeva said, “On the other hand, global cues are indicating some pressure on gold with key resistance in sight at $1950 per ounce, where a rebound in the dollar index from multi-month lows is capping prices at higher levels. The US Fed has been soaking on all the excess liquidity and markets are now looking forward to any signals by the US Fed towards winding down its aggressive rate hike cycle by March that shall further set the tone of prices."

Expecting positive impact of budget 2023 proposals on gems and jewelry business, Colin Shah, MD at Kama Jewelry said, “The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization. This announcement may help in reducing the import of gold."

While presenting the Union Budget 2023, Finance Minister Nirmala Sitharaman said, "Customs Duties on Dore and bars of gold and platinum were increased earlier this fiscal. I now propose to increase the duties on articles made therefrom to enhance the duty differential. I also propose to increase the import duty on silver Dore, bars and articles to align them with that on gold and platinum."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Asit Manohar
Chief Content Producer at Live Mint Digital Team
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