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MCX Gold, MCX Silver Prices Decline As Oil Surges On Continued Strait Of Hormuz Blockade

Maritime Blockade Continues To Serve As A Macro-Tailwind For Inflationary Pressures

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In domestic trading, silver futures for May 2026 delivery dropped sharply by Rs 6,144, or 2.4 per cent, to Rs 2,42,220 per kg. Gold contracts for June 2026 delivery also declined, slipping Rs 938, or 0.7 per cent, to Rs 1,51,719 per 10 grams. This came after the previous session, where silver had surged nearly 2 per cent, or around Rs 4,000, while gold closed largely unchanged.

The precious metals vertical is currently navigating a period of heightened beta, characterised by significant price retracement in the MCX Gold and Silver indices. This downward pressure is primarily catalysed by a bullish surge in energy benchmarks, precipitated by the ongoing logistical constraints within the Strait of Hormuz corridor.

As the global risk landscape remains fluid, stakeholders must monitor the US-Iran geopolitical nexus. While the administration has signalled a temporary cessation of kinetic escalations, the persistent maritime blockade continues to serve as a macro-tailwind for inflationary pressures, complicating the valuation outlook for non-yielding assets.

The trajectory of precious metals is intrinsically linked to the Federal Reserve’s hawkish-to-dovish recalibration. Market participants are currently price-adjusting for a “Higher for Longer” interest rate environment:

  • Fed Chair Succession: The potential onboarding of Kevin Warsh is viewed as a pivotal “X-factor,” likely to dictate the velocity of future quantitative tightening or easing cycles.
  • Rate Cut Deceleration: Consensus data from recent economic surveys indicate a significant pushback of the easing cycle. The probability of a 25-basis-point adjustment in December has been diluted to 23%, down from 28% WoW.
  • The Yield-Bullion Inverse Correlation: In an environment where energy-driven inflation persists, the Federal Reserve may opt for monetary stasis, increasing the opportunity cost of holding bullion versus interest-bearing instruments.
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National News

Jewellery Manufacturers Seek Tax Relief As Rising Gold Prices Inflate Inventory Valuations

Higher Gold Prices Sustained Turnover Value, But Jewellery Volumes Declined As Consumers Adjusted To Costlier Purchases.

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Jewellery manufacturers in Coimbatore have submitted a representation to the Government of India seeking a review of the existing methodology for valuation of gold inventory for income tax purposes, citing significant financial pressures arising from the sharp increase in gold prices.

According to industry representatives, the closing stock value of gold held by jewellery manufacturers and retailers is currently determined on the basis of the weighted average cost of inventory available at the end of the financial year. The sector has highlighted that gold prices witnessed an increase of approximately 65 per cent between March 2025 and March 2026, resulting in a substantial rise in the book value of inventory.

Industry stakeholders have stated that while the monetary value of sales turnover may have remained comparable to the previous year due to higher gold prices, the actual quantity of jewellery sold has declined as consumers adjust to elevated price levels. Consequently, manufacturers contend that the appreciation in inventory value is being reflected in taxable income despite the absence of corresponding realised sales and cash flows.

The industry has further represented that maintaining adequate gold inventory is essential for meeting consumer demand for a wide range of designs and product categories. As a result, manufacturers are unable to significantly reduce stock holdings without affecting business operations and market competitiveness.

Particular concern has been expressed by micro and small-scale jewellery manufacturers, who report increased working capital requirements and liquidity constraints arising from taxation linked to inventory appreciation. Industry associations have requested that the Government examine alternative valuation or taxation mechanisms that more accurately reflect realised business income and cash generation.

The representation seeks consideration of suitable policy measures to address the financial impact of inventory value appreciation on jewellery manufacturers while ensuring continued compliance with taxation requirements and supporting the sustainability of the sector. Hence, the government should take separate statement of the gold stock with the manufacturers every year. It should collect advance tax based on the sales.

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