Gold and silver prices witnessed a sharp surge across major Indian cities on Wednesday (May 13), after the Centre raised import duties on precious metals to 15 percent and Prime Minister Narendra Modi appealed to citizens to avoid non-essential gold purchases amid growing pressure on the country’s external finances due to the escalating West Asia crisis.
The sudden increase in import duty from 6 percent to 15 percent immediately pushed up domestic bullion prices, with traders, jewellers and investors reacting to the steep rise in import costs and fears of prolonged geopolitical instability. Market sentiment was further influenced by concerns over the weakening rupee, rising crude oil prices and mounting pressure on India’s foreign exchange reserves.
On the Multi Commodity Exchange (MCX), gold futures jumped more than 7 percent during the day to touch around Rs 1,64,497 per 10 grams, while silver futures surged nearly 8 percent to about Rs 3,01,429 per kilogram. The sharp spike reflected both the higher landed cost of imported bullion and increased safe-haven demand amid uncertainty in global markets.
Retail gold prices also climbed steeply across major metropolitan centres. In Mumbai, 24-carat gold was quoted at around Rs 1,63,710 per 10 grams, while in Delhi the price stood at nearly Rs 1,63,430. Chennai recorded one of the highest rates among major cities at about Rs 1,64,190 per 10 grams. In Kolkata, gold prices touched Rs 1,63,490, while Bengaluru and Hyderabad reported rates of approximately Rs 1,63,840 and Rs 1,63,970 respectively.
Silver prices mirrored the rally in gold. In Mumbai, silver traded at roughly Rs 2,96,770 per kilogram, while Delhi recorded prices of about Rs 2,96,260 per kilogram. Chennai saw silver prices rise to nearly Rs 2,97,630 per kilogram. In Kolkata, the metal was priced at around Rs 2,96,380, while Bengaluru and Hyderabad reported prices of approximately Rs 2,97,000 and Rs 2,97,240 per kilogram respectively.
The sharp movement in bullion prices came within days of Modi’s appeal urging citizens to avoid avoidable expenditure on gold and other non-essential imports as the country confronts a worsening external sector situation triggered by the ongoing conflict in West Asia. The government has expressed concern that rising imports of gold, combined with soaring crude oil prices, could significantly widen the trade deficit and increase pressure on the rupee.
Officials said the duty hike was intended as a calibrated measure to discourage discretionary imports and conserve foreign exchange reserves at a time when India’s import bill is expected to rise sharply. The government is particularly concerned about the impact of the conflict near the Strait of Hormuz, a critical global energy shipping route through which a substantial portion of India’s crude oil imports pass.
Industry reports quoted several bullion dealers and jewellery retailers saying the higher duty would immediately increase the retail cost of gold jewellery and investment products. Industry estimates suggest the latest hike could raise the price of gold by nearly Rs 27,000 per 10 grams compared to pre-duty levels.
The jewellery industry expressed concern that the steep increase in import duty could adversely affect consumer demand, especially during the upcoming wedding and festive seasons. Retailers expect a temporary decline in purchase volumes as buyers shift towards lighter jewellery, exchange schemes and lower-weight ornaments to manage rising prices.
Industry representatives also warned that a sharp rise in duties could encourage smuggling and expand the grey market, reviving concerns that had surfaced during earlier periods of elevated import tariffs on gold.
Despite expectations of softer retail demand, analysts believe bullion prices may remain elevated in the near term because of persistent geopolitical uncertainty, rising global commodity prices and continued investor preference for safe-haven assets.
The government’s latest move has effectively increased the overall tax burden on imported gold and silver to 18.45 per cent after including the 3 per cent Integrated GST (IGST). Economists said the measure is aimed at easing pressure on the current account deficit, supporting the rupee and ensuring that foreign exchange resources are prioritised for essential imports such as crude oil, fertilisers and industrial raw materials.
The developments have once again placed gold at the centre of India’s economic and policy discourse, with rising prices, geopolitical tensions and concerns over external-sector stability driving both market volatility and consumer anxiety.