Gold prices in Delhi markets took a step back from their recent record highs, while silver also saw a significant drop. However, the futures market and global spot prices tell a different story, with both precious metals continuing their upward trajectory.

Delhi Market: Gold and Silver Prices Dip

In the Delhi bullion market, gold prices experienced a modest decline:

• Standard gold (99.5% purity) decreased by ₹200 to ₹1,06,800.00 per 10 grams
• Pure gold (99.9% purity) also fell by ₹200, settling at ₹1,07,670.00 per 10 grams

Silver witnessed a more substantial decrease:

• Silver prices tumbled by ₹1,000, reaching ₹1,26,000.00 per kg
• This follows silver hitting a lifetime high of ₹1,27,000.00 per kg on Saturday

Futures Market: A Contrasting Picture

Despite the dip in physical markets, futures contracts on the Multi Commodity Exchange (MCX) painted a bullish picture:

• MCX gold for October delivery climbed by ₹447, touching a record ₹1,08,175.00 per 10 grams
• December silver futures soared by ₹1,703, reaching an all-time high of ₹1,26,400.00 per kg

Global Markets: New Heights for Gold

The international markets echoed the strength seen in Indian futures:

• Spot gold rose by $35.11, hitting a fresh peak of $3,621.92 per ounce
• Comex gold futures reached a record $3,662.00 per ounce

Factors Driving the Rally

Several factors are contributing to the ongoing strength in precious metals:

1. Safe-haven demand
2. Expectations of potential rate cuts
3. Dovish stance from the Federal Reserve
4. Weak US labor data
5. Ongoing geopolitical tensions between Russia and Ukraine

Performance Metrics

Gold has shown remarkable performance:

• Over 4% gain in the first week of September
• Year-to-date gains exceeding 36%

Silver's Industrial Appeal

Silver is benefiting from increased industrial demand, particularly from:

• Solar energy sector
• Electric vehicle production
• Electronics industry

This rising demand, coupled with constrained supply, is supporting silver prices.

Market Outlook

The contrasting movements in physical and futures markets suggest a complex landscape for precious metals. While local physical markets saw some profit-taking, the overall sentiment remains bullish, as evidenced by the strong performance in futures and global spot markets.

Investors and market participants will be closely watching economic indicators, central bank policies, and geopolitical developments for cues on the future direction of gold and silver prices.

In a significant development for India's tax landscape, the Goods and Services Tax (GST) Council has decided to maintain the current tax rates on gold and silver, while simultaneously introducing sweeping changes to the overall GST structure.

Gold and Silver Rates Unchanged

The GST Council, during its 56th meeting, opted to keep the tax rates on gold and silver steady at 3.00% on value. Additionally, the 5.00% tax on jewelry making charges remains unaltered. This decision provides a sense of stability for the precious metals market.

Introduction of 'GST 2.0'

The council's meeting marked a turning point in India's indirect tax system with the introduction of 'GST 2.0' reforms. These reforms aim to simplify the existing tax structure significantly:

• The current four-slab system is being restructured into two main slabs of 5.00% and 18.00%.
• The 12.00% and 28.00% categories are being eliminated to streamline the tax structure.
• A new 40.00% tax slab has been created for luxury and sin goods.

New High-Tax Category

The newly introduced 40.00% tax slab will apply to several items considered luxury or sin goods, including:

• Pan masala
• Tobacco products
• Aerated beverages
• Personal aircraft
• Yachts

This move is likely aimed at discouraging the consumption of harmful products while generating additional revenue from luxury items.

Implications for Traders and Consumers

The decision to maintain the current tax rates on gold and silver is expected to bring relief to bullion and jewelry traders. This stability in tax rates could potentially boost consumer confidence in the precious metals market.

Conclusion

The GST Council's decisions mark a significant overhaul of India's indirect tax system. While introducing major changes to simplify the overall tax structure, the council has ensured stability in the precious metals sector by maintaining existing rates. These reforms are set to reshape India's tax landscape, potentially impacting businesses and consumers across various sectors.