Gold prices to rise by Rs. 600 on import duty hike

Gold prices are likely to shoot up by about Rs. 600 per 10 grams following the government's decision to hike customs duty, jewellers and bullion traders told Press Trust of India.

The government on Tuesday hiked import duty on refined gold bars for a third time in eight months to 10 per cent from the earlier 8 per cent. Import duty on silver was hiked to 10 per cent from the earlier 6 per cent, while the factory gate duty on gold bars to 9 per cent from 7 per cent.

At the current level of imports, the government expects revenue of Rs. 4,830 crore from the duty hikes for the rest of the financial year ending March 31, 2014.

Meanwhile, domestic gold prices rallied for a fifth straight day, to hit a four-month high. Gold prices gained Rs. 565 to Rs. 29,825 per ten grams in the national capital on Tuesday.

Rising demand for the festive season amid a firm global trend helped support sentiments, traders told PTI. The yellow metal is now trading at a level last seen on April 10.

Silver prices surged by Rs. 1,845 to Rs. 45,965 per kg on brisk buying by jewellers and coin makers.

In the U.S., gold prices climbed $22.60 to $1,337.30 an ounce and silver by 4.23 per cent to $21.43 an ounce.

They said fall in gold and silver imports on account of various steps taken by the government created paucity of stocks and partly pushed up the metal.