Trump’s New Gold Bar Tax: Buying Gold in India May Soon Get 10% Costlier

Business News: The United States has recently announced a major economic move, increasing the import duty on 1 kg and 100-ounce gold bars. This decision will not only influence the US market but is expected to send ripples across the global gold trade—particularly in India. As the world’s second-largest consumer and largest importer of gold, India’s gold market is highly sensitive to international price fluctuations.

Record Surge in Global Prices

Following the US announcement, global gold prices have witnessed a sharp rise:

• COMEX (New York): Gold prices touched a historic $3,534.10 per ounce.
• MCX (India): Domestic futures prices surged to ₹102,250 per 10 grams—the highest level on record.

Commodity market experts believe this is only the beginning. If the US maintains the higher tax rate, gold prices could climb even further in the coming months.

Impact on India—Why the Burden Will Grow

India imports about 800–900 tonnes of gold annually, which serves not only as a key raw material for jewelry but also as an important investment and savings instrument. The rise in global prices will affect India in several ways:

• Higher Import Costs: Increased global rates will make imports more expensive.
• Currency Factor: Payments are made in dollars, so any shift in the dollar-rupee exchange rate will add extra pressure.
• Demand-Supply Gap: During wedding and festive seasons, supply shortages may push prices even higher.

Opportunities and Risks for Investors

In 2024 so far, gold has delivered over 33% returns in India.

• Advantage: Early investors are poised to earn better profits.
• Risk: New buyers will face higher entry costs, making investment less accessible.

Experts suggest opting for gold ETFs or small-denomination coins and jewelry rather than large bars to reduce risk in case of sudden price corrections.

Wedding & Festive Season Concerns

October and November mark the peak gold-buying period in India, with festivals like Dhanteras and Diwali, as well as the wedding season. Jewellers predict that the steep price rise could slash demand by 10–15% this year. In rural areas—where gold is traditionally a preferred form of saving—buying activity may also slow down.

Impact on Switzerland-India Trade

Switzerland, the world’s top gold refining hub, counts the US as its biggest customer. With higher US taxes weakening Swiss exports to America, Switzerland may target other markets—especially India. However, as global prices remain high, India will still be importing gold at elevated costs.

The Road Ahead

If the US tax hike stays in place long term, it could trigger lasting changes in the global gold supply chain. India might have to:

• Explore alternative import sources such as the UAE or African nations.
• Boost domestic gold production.
• Promote gold recycling to cut reliance on foreign imports.

With wedding season approaching and prices hitting record highs, Indian households and investors may need to rethink their gold-buying strategies in the months ahead.