India gold discount widens sharply as buyers await clarity on import duty cut

Thu Aug 27 2026

Gold and silver prices in India fell on August 27 even as global bullion prices moved higher. Moneycontrol exclusively reported earlier that the government is discussing a possible cut in import duties on the precious metals. Analysts believe that fresh hopes of a duty cut has triggered a wait-and-watch approach among physical buyers, widening the discount on domestic gold and creating a sharp divergence between Indian and global prices.

On MCX, gold was down 0.8% at around Rs 1.58 lakh per 10 grams for October futures, while silver was down 0.2% at Rs 2.38 lakh per kg for September futures at the time of writing. In contrast, spot gold was up 0.8% at $4,630.09 an ounce, while US gold futures gained 0.7% to $4,685.50. Spot silver was also trading 1.7% higher at $69.28 an ounce.

Moneycontrol exclusively reported that discussions are underway within the central government on scaling back duties on both gold and silver. Sources told Moneycontrol that bullion traders and jewellery industry representatives are pushing for the import duty to be reduced from the current 15%, with a cut to 6% being discussed. No final decision has been taken yet.

Policy uncertainty driving Gold discount

The immediate market reaction has been visible in India's physical gold market, where discount to the landed or import-parity price widened sharply.

Earlier this week, domestic gold was trading at a discount of around 2–2.5% to the landed price, equivalent to roughly $45 an ounce. Overnight, that discount widened by another 1–1.5 percentage points. This means Indian gold is now trading significantly below the price at which imported gold would normally land in the country.

The reason is straightforward: buyers are reluctant to build inventory at current prices when there is a possibility that a duty cut could lower the landed cost of gold almost overnight. Dealers, therefore, are facing greater pressure to offer discounts, while physical buyers are holding back purchases until there is more clarity on the government's decision.

Bhavik Patel, senior commodity analyst at Tradebulls Securities, said the move reflects classic wait-and-see behaviour ahead of a potential policy trigger. “If a duty cut lands, the landed cost of gold drops overnight,” Patel said, adding that dealers holding inventory bought at the higher duty could again be forced to discount their stocks to remain competitive.

Patel said the latest 1–1.5% widening in the discount is largely speculation-driven as there is no confirmation of the policy yet. He expects continued selling pressure and discounting until there is clarity.

"The latest widening, therefore, suggests that the physical market has moved from recovery back into policy uncertainty. If a duty cut is announced, the domestic market could then see a rapid repricing. If the government does not announce a cut, the discount could gradually return towards the mid-2% range," he said.

The current 15% import duty was raised on May 13, 2026, with the aim of curbing gold imports and conserving the country's dollar reserves.

What next for gold and silver?

From a technical perspective, Aamir Makda, commodity analyst at Choice Broking, sees resistance for gold at Rs 1,60,725–1,64,060. On the downside, the 100-EMA on the four-hourly chart at Rs 1,53,737 is the key short-term support.

For silver, immediate support is seen at Rs 2,35,700. A break below this level could accelerate downside momentum, while resistance is placed at Rs 2,43,700–2,51,000.

Source: https://www.moneycontrol.com/