While a premium resulting from the recently introduced import duty is understandable, the current differential of approximately ~16% appears unusually high and difficult to justify based on taxes alone.
What factors could be contributing to such a significant premium in the Indian market?
So, even if the international gold prices drops, which instrument do you actually BUY to Buy the dip ?
Isn’t taxes like 16%. So why not?
The gold import duty was increased from 6% to 15%, a difference of 9 percentage points.
That’s why, once the news was announced, gold prices jumped by roughly 9% the following day.
The original 6% duty was already reflected in the price at the swing low, since the duty rate at that time was 6%.
Now, when measuring from that same swing low to the latest price, the differential is approximately 16% instead of the 9%. Got the point ?
Did you account for inr depreciation during the period? A better comparison would be against XAUINRG
