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Quick Summary
Gold and silver prices witnessed a sharp rally on 13 May after the Indian government increased import duty on precious metals from 6% to 15%. Silver hit the 6% upper circuit on MCX, while gold prices also surged strongly. Apart from the duty hike, rising US inflation and ongoing geopolitical tensions in the Middle East supported global bullion prices.
Gold and silver prices jumped sharply on Wednesday, 13 May, following the government’s decision to raise import duty on precious metals. The announcement led to a major rise in domestic bullion prices, while strong global cues also added support to the rally.
At around 9:15 am on MCX, silver prices touched the 6% upper circuit at ₹2,95,805 per kg. Gold prices also climbed sharply and reached ₹1,62,648 per 10 grams.
Following the latest rally, gold prices are trading close to record highs in India, while silver prices have crossed historic levels in several domestic markets. Internationally, precious metals also remained strong as investors continued to move towards safe-haven assets.
Spot silver gained 1% to $87.40 per ounce, while spot gold stood at $4,713.39 per ounce. US gold futures for June delivery rose 0.7% to $4,721.80 per ounce.
Government Raises Import Duty on Precious Metals
The Centre increased import duty on gold and silver from 6% to 15%. The revised structure includes a 10% basic customs duty and an additional 5% Agriculture Infrastructure and Development Cess (AIDC).
The new duty rates came into effect from 13 May 2026 and are applicable on gold, silver, platinum, jewellery findings, and industrial imports related to precious metals.
The government has also revised concessional duty rates on gold imports from the UAE under the fixed-quantity quota system. Import duty on jewellery components such as hooks, clasps, clamps, pins, and screw backs has also been increased.
Why Did the Government Increase the Duty?
The government aims to reduce rising imports of precious metals and protect the country’s foreign exchange reserves.
India’s gold imports rose over 24% to a record $71.98 billion in FY26, compared to $58 billion in FY25. Gold imports were $45.54 billion in FY24 and $35 billion in FY23.
Commerce ministry data showed that gold now accounts for more than 9% of India’s total imports. Switzerland remains the largest supplier of gold to India with nearly a 40% share, followed by the UAE at 16% and South Africa at 10%.
Higher imports have also added pressure on India’s trade deficit and current account deficit. India’s trade deficit widened to $333.2 billion in FY26, while the current account deficit increased to $13.2 billion in the December quarter from $11.3 billion a year ago, according to RBI data released on 2 March.
PM Modi Urges Citizens to Avoid Unnecessary Gold Purchases
On 10 May 2026, Prime Minister Narendra Modi urged citizens to avoid unnecessary gold purchases and reduce spending due to concerns over rising import bills and pressure on forex reserves.
While addressing a public gathering in Hyderabad, Modi requested people not to purchase gold for weddings for one year. He also advised citizens to reduce unnecessary foreign travel and use fuel carefully to support the country’s economic position.
Despite the appeal, gold demand in India continues to remain strong due to weddings, festivals, and the metal’s traditional image as a safe-haven investment. India remains the world’s second-largest gold consumer after China.
Global Factors Supporting Gold and Silver Prices
Apart from the import duty hike in India, global developments are also supporting bullion prices.
Recent US inflation data showed consumer inflation rose to 3.8% year-on-year in April, mainly due to higher energy prices. Following the data release, expectations of a US Federal Reserve rate cut weakened, while the benchmark 10-year US Treasury yield climbed to 4.47%.
Normally, higher interest rates reduce the attractiveness of gold because bullion does not offer interest income. However, investors continued to buy gold and silver amid inflation concerns and geopolitical uncertainty.
The ongoing Iran conflict and concerns surrounding the Strait of Hormuz have also kept commodity markets volatile. Any disruption in oil supply routes could increase global inflationary pressure, which has boosted demand for safe-haven assets like gold and silver.
Impact on Jewellery Stocks and Gold ETFs
Jewellery stocks traded mixed on Wednesday as rising gold prices raised concerns over weaker consumer demand and lower discretionary spending.
As of 11:19 am on 13 May 2026:
- Thangamayil Jewellery: Down 6%
- Kalyan Jewellers: Down 5%
- Titan Company: Down 0.46%
- Senco Gold: Up 1.14%
- PC Jeweller: Up 0.71%
- Sky Gold and Diamonds: Down 7%
- Goldiam International: Up 0.18%
Jewellery stocks had already been under pressure earlier this week after Prime Minister Narendra Modi appealed to citizens to avoid non-essential gold purchases for one year to help conserve foreign exchange reserves.
Meanwhile, gold and silver ETFs rallied strongly after bullion prices surged on MCX. Among the 25 gold ETFs, Quantum Gold Fund emerged as the top gainer, rising nearly 15% to an intraday high of ₹143.37 from its previous close of ₹124.90. Tata Gold ETF advanced 12%, while Zerodha Gold ETF gained around 9% as of 9:16 am on 13 May 2026.
Conclusion
Gold and silver prices witnessed a sharp rise after the government increased import duty on precious metals to 15%. Strong global inflation concerns and geopolitical tensions have also supported bullion prices worldwide. Analysts believe gold and silver may remain volatile in the coming weeks due to continued economic and geopolitical uncertainty.
