ING's commodities strategists Warren Patterson and Ewa Manthey report that India, a key Gold consumer, has sharply increased import tariffs on Gold and Silver to support the rupee and foreign exchange reserves as the Iran conflict continues. They note that India relies heavily on imports and expect the higher tariffs to act as a near-term headwind for physical Gold demand and import flows.

Higher Indian tariffs curb physical demand

"In precious metals, India, the world’s second-largest gold consumer, has more than doubled import tariffs on gold and silver. This is part of efforts to support the rupee and ease pressure on foreign exchange reserves as the Iran conflict drags on."

"The government raised the tariff on gold and silver imports from 6% to 15%."

"India meets most of its gold demand through imports, with gold and silver accounting for nearly 11% of total imports. The tariff hike is likely to be a near-term headwind for physical gold demand in India, potentially tempering local buying and weighing on import flows."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)