Jun 05, 2026, 02:40 AM Import duty hike and volatile prices keep Indian gold demand subdued. China premiums narrow as cautious sentiment weighs on physical buying. Analysts warn smuggling risk rises as domestic discounts widen sharply. India’s gold demand remains subdued as buyers stay cautious amid volatile prices and higher import duties, with premiums narrowing in China as well. Analysts warn that regulatory tightening and inflation risks could keep consumption weak through 2026. Domestic gold prices were trading around INR 158,400 per 10 grams on Friday. India is one of the largest consumers of gold in the world. Subdued demand in India Indian gold demand has slowed, with buyers hesitant due to volatile prices and elevated import duties, according to a Reuters report . Traders said consumers are reluctant to commit to purchases, particularly after the government raised the import duty to 15% in May, the steepest increase on record. “Demand is very weak. People are waiting for prices to stabilize,” one Mumbai-based dealer told Reuters. The World Gold Council (WGC) noted in its May update that jewellery and bar-and-coin demand could decline by 50–60 tonnes (10% year-on-year) in 2026 due to the duty hike. Domestic prices are trading at a deep discount to landed prices, widening from about $14/oz before the hike to nearly $150/oz afterwards, as ample supply and profit-taking weighed on premiums. Regulatory tightening and market impact The duty hike was part of broader measures aimed at conserving foreign exchange reserves amid geopolitical uncertainty and a weakening rupee. Banks paused bullion imports for over a month earlier this year due to delays in government notifications, further disrupting supply. Large chain jewellers reported panic buying immediately after the duty announcement but expect slower sales ahead. Smaller retailers, already pressured by high prices, are struggling with reduced volumes and margins. China premiums narrow The premiums in China, the world’s top consumer, have narrowed, reflecting cautious sentiment. Buyers are hesitant as global prices remain volatile, and local demand has softened. This trend mirrors India’s slowdown, suggesting broader regional weakness in physical gold consumption. The WGC’s May commentary noted that gold fell 1% in May, finishing at $4,546/oz, as positive risk sentiment and ETF outflows weighed on prices. Analysts warned that the Federal Reserve may need to hike rates later this year as inflation pressures mount, which could prolong headwinds for gold. “Gold is vulnerable, perched on its 200-day moving average, in what looks like a declining channel,” the WGC said. Smuggling concerns and outlook Past trends suggest that higher import duties increase unofficial inflows. After the 2013 duty hike, smuggled gold rose sevenfold within a year. A similar pattern was seen after the 2022 hike to 15%, when unofficial imports surged from 17 tonnes to nearly 50 tonnes. Analysts caution that the latest increase could again encourage smuggling, widening the domestic–international price gap. India’s gold demand is expected to remain muted in the near term, with jewellery purchases subdued outside of weddings and festivals. Investment demand is more sensitive to duty changes and could decline further if inflation persists. Globally, ETF flows remain lacklustre, and the possibility of Fed rate hikes poses additional risks. For now, the market is caught between regulatory tightening, volatile prices, and cautious consumers. Unless prices stabilize and policy pressures ease, India’s gold demand is likely to stay weak through the rest of 2026, with broader implications for global bullion trade. Source： https://invezz.com/news/2026/06/05/india-gold-demand-weakens-as-soaring-prices-keep-buyers-on-the-sidelines/

22 May, 2026 Highlights Gold import duty was raised sharply by 9%– from 6% to 15%, the steepest increase on record – alongside broader regulatory tightening Domestic gold prices have not yet fully reflected the duty hike amid weak demand and ample supply; local markets are currently in deep discount from the landed price 1 Past trends indicate that higher duty increases unofficial inflows, although official imports remain relatively resilient Gold demand is expected to moderate in 2026, with jewellery and bar and coin demand projected to decline by 50–60t (~10% y/y) on account of the import duty hike. Policy actions on gold imports Since early April the government has adopted a series of measures aimed at moderating gold imports. These have been part of a broader push to conserve foreign exchange reserves amid geopolitical uncertainty and mounting pressure on the INR, which has depreciated by more than 7% y-t-d. These measures include price-based actions, administrative and regulatory tightening, and consumer-directed messaging. While noteworthy, they are not unprecedented; gold is among the top five imports for India, accounting for 8% of the country’s merchandise imports in 2025, and similar measures have been utilised in the past. On the price front, the gold import duty was raised sharply from 6% to 15%, making it the single largest increase on record and fully reversing the duty cut of July 2024 ( Chart 1 ). Rules were also tightened for gold imports linked to exports (under the advance authorisation scheme) 2 and the Prime Minister has directly appealed to consumers, urging them to avoid buying gold for a year. 3 Chart 1: Import duty reverses course Customs duty on gold (%)* *As of 13 May 2026 Source: CBIC, World Gold Council. These measures followed a series of policy actions that were seen as efforts to slow the import of gold, including the delay in issuing annual licenses for bullion imports to banks, 4 restrictions on the import of all forms of gold, silver and platinum jewellery and platinum alloys; 5 and continued delay in issuance of notification exempting banks from the Integrated Goods and Service Tax (IGST), 6 which led to the banks pausing bullion imports for over a month. 7 The pattern of gold import duty revisions To date, India’s gold import duty revisions have been infrequent, with long periods of stability between policy revisions. Gold imports were subject to a flat duty (a fixed rupee amount per 10g) prior to 2012, but this was subsequently replaced by a value-based duty structure. Between 2012 and 2013 duties were raised repeatedly through a series of 2% hikes, up to 10%. This was followed by a prolonged gap of nearly six years before a further 2.5% hike in July 2019. Since then, revisions have become larger and more frequent, including duty cuts in 2021 and 2024 and sharp hikes in 2022 and 2026, reflecting a more active use of import duties to manage trade dynamics. Table 1: India’s gold import duty cycle Source: CBIC, World Gold Council Price adjustment – the tariff lag effect As expected, the import duty hike led to an immediate increase in domestic gold prices. However, the rise in prices was lower than the 9% increase in duty. Physical market prices, proxied by the MCX spot gold price, have risen in the range of 4% to 6% since the change in duty. While the duty hike mechanically raises the official domestic or landed price, 8 physical market prices do not fully or immediately mirror the increase in duty – rather they adjust to it with a lag, particularly when the change is as steep as the current 9%. Moreover, the increase came at a time of seasonally weak demand – summer wedding purchases are largely over, and the period from mid-May to mid-June is considered inauspicious for buying gold – thus limiting the full pass-through of the duty hike. Market feedback indicates that there is ample supply from the exchange of old gold jewellery for new, and the likely front-loading of imports, further limiting the rise in price. Chart 2: Prices have risen less than the duty hike Landed price and MCX spot gold price in USD per ounce* *As of 18 May 2026. Landed price is the international prices (LBMA Gold Price AM) adjusted for import taxes. Source: Bloomberg, CBIC World Gold Council. Domestic gold prices trade at a deep discount post duty revision In the immediate aftermath of the import duty hike, domestic gold prices traded at a steep discount to official prices, 9 widening from an average of US$14/oz the week prior to the duty hike to nearly US$150/oz ( Chart 3 ). The rise in domestic prices post the duty hike triggered profit-taking by investors, boosting supply even as physical buying weakened, and bullion dealers likely offloaded inventory imported at lower duty rates, adding to market supply. Chart 3: Discounts widened sharply NCDEX gold premium/discount relative to the official domestic price* *As of 15 May 2026. Source: NCDEX, World Gold Council. Previous import duty hikes in 2019 and 2022 also resulted in discounts in the domestic market, but this episode has been significantly more pronounced due to the scale of the increase ( Table 2 ). Table 2: Post-duty hike movement in domestic gold price discounts (US$/oz) Source: NCDEX, World Gold Council Market and trade reaction and expectations Share prices of listed jewellers fell by ~2%–17% following the duty hike, reflecting expectations of weaker discretionary demand. Market feedback and trade interactions suggest a varied impact across segments, with many retailers indicating a likely pause in procurement. Large chain stores saw a brief period of panic buying after the announcement, driven by expectations of further measures, and while they expect a slowdown in sales, they remain relatively resilient given inventory buffers and continued support from bridal demand. Mid-sized and regional players continue to see buying from affluent customers but are expecting to rely more on exchange programmes and tighter inventory cycles going forward. Smaller retailers appear the most vulnerable: already stretched by persistently high prices, they now face added pressure from sales volumes and profit margins. Import duties and smuggling Import data points to a consistent relationship between higher import duties and the inflow of unofficial gold. Between 2013 and 2026 increases in import duty were mostly followed by higher levels of unofficial or smuggled gold, while duty reductions coincided with sharp declines in such inflows. Excluding the COVID years of 2020–21, the correlation between import duty and unofficial imports is positive at 0.52, indicating a meaningful link between higher duties and smuggling activity. Following the 4% duty hike in 2013, unofficial imports increased sharply from around 10t in Q1 of that year to 70t by Q1 2014, a seven-fold increase in under a year. Even when duties were steady at 10% through the second half of 2013 until Q2 2019 unofficial inflows remained elevated, averaging 34t per quarter. This suggests that once smuggling networks are established they are difficult to unravel. A similar pattern was observed after duty was hiked from 10.75% to 15% in July 2022. Unofficial imports rose from 17t in Q2 2022 to nearly 50t by late that year and stayed elevated through much of 2023. In contrast, after duty was cut to 6% in July 2024, unofficial imports fell almost immediately to near zero. There was a temporary drop in unofficial imports during 2020–21, which can be attributed to COVID-related disruptions. The evidence suggests that higher import duties widen the domestic–international price gap and increase the incentive for smuggling, while lower duties reduce its attractiveness. Chart 4: Import duty driven shifts Source: Metal Focus, World Gold Council. Limited duty sensitivity of imports Our analysis suggests that import duty changes have had a limited influence on official import volumes over the past 13 years. 10 Across duty regimes ranging from 6% to 15% official imports remained relatively resilient, between 175t and 236t per quarter in most periods, excluding the COVID period in 2020. The highest quarterly imports were recorded under the 10.75% duty regime (236.2t), while imports also remained stable at the higher 15% duty rate (174.5t). Statistically, the overall correlation between duty rates and official imports is negative 0.17, indicating a weak relationship between the two. This suggests that duty changes are not a key driver of imports; rather, broader demand conditions play a greater role. Chart 5: Steady imports through duty cycles Average quarterly official imports at various import duty levels* *As of 18 May 2026. Source: DGCIS, CBIC, World Gold Council Recent data also highlights import resilience: April imports rose to US$5.6bn, up more than 80% on an annual as well as a sequential basis. This was despite banks pausing gold imports as they awaited the renewal notification that exempt them from the integrated goods and services tax (IGST). This suggests that the imports were likely driven by refiners, who increased their intake of gold doré around the key demand period of Akshaya Tritiya (19-20 April) further supported by gold price moderation. At the same time, some degree of front loading of imports – in anticipation of curbs amid the prolonged Iran-US conflict, elevated oil prices, and the INR vulnerability to a high import bill – cannot be ruled out based on anecdotal evidence. In volume terms, we estimate imports in April were in the range of 48-55t. Chart 6: Imports rise despite disruptions Monthly gold imports in tonnes and US$bn* *Includes World Gold Council estimates. Source: Ministry of Commerce and Industry, CMIE, World Gold Council Gold ETFs: flows slow Indian gold ETFs continued to attract inflows in April 2026, marking the 12th consecutive month of positive flows. Net inflows stood at INR30.4bn (US$325mn), broadly in line with our estimates . 11 While inflows were modestly higher sequentially (up 3% m/m), they remained well below January’s peak, at about 13% of the INR240bn (US$2.6bn) recorded at that time, signalling a moderation in demand after a very strong start to the year. Redemptions stayed elevated in April at INR20.5bn (US$220mn), reflecting ongoing profit-taking, a trend seen since February. Cumulative holdings rose by 1.1t to 116.7t, while AUM stood at INR1,781bn (US$19bn), a modest 3% decline from January, largely due to softer gold prices (down ~9% in INR terms). Investor participation remained healthy, with folios (or accounts) reaching 12.5mn, although growth slowed in April, with folio additions of 77,413 – the lowest since September 2024. Gold ETFs experienced outflows following the import duty hike, with redemptions from 13-18 May largely reversing earlier gains. On a month-to-day basis, however, demand remains marginally positive at around INR1bn (~US$12mn). Chart 7: Gold ETF momentum softens Gold ETF flows in INRbn, and total holdings in tonnes* *As of end April 2026. Source: AMFI, ICRA Analytics, CMIE, World Gold Council Demand moderation Gold demand trends across different duty regimes indicates that while import duties influence consumption, other key factors such as gold prices, income growth and inflation, simultaneously impact demand. Periods of high import duties have generally coincided with a moderation in demand, particularly for bars and coins. Average quarterly demand remained relatively subdued during the extended 10% duty period of 2013-19 ( Chart 8 ) as well as during the period of 12.5% duty (2019-20), although the latter was also affected by COVID. Chart 8: Tariffs temper demand Average jewellery and bar and coin demand at various import duty levels* Source: Source: Metal Focus, CBIC, World Gold Council Our econometric models 12 suggest that changes in import duties tend to impact gold demand in both the short and long term, although the impact differs across jewellery and investment products such as bars and coins. Investment demand appears more sensitive to duty changes, while jewellery demand has shown greater resilience. Jewellery consumption is influenced more by prices and inflation and import duties have less of an impact. This is likely because jewellery purchases often tend to be a requirement, particularly for weddings and social occasions. Investment demand on the other hand is linked to income levels and import duties, with higher duties and restrictions tending to weigh on demand. In the short term, factors such as inflation and rainfall also influence investment demand alongside taxes. Looking at 2026 as a whole, we estimate that combined jewellery and bar and coin demand could decline by around 50-60t, around 10% lower than the previous year due to the impact of the import duty hike. Other factors, such as the gold price, changes to income levels, inflation, or effects from the monsoon would further influence annual demand. Footnotes 1 Landed price is the international price (LBMA Gold Price AA) adjusted for import taxes. Prices as of 18 May 2026. 2 Centre further tightens gold import rules, caps advance authorization at 100 kg, The Tribune, 20 May 2026. 3 Why PM Modi asked Indian families not to buy gold for a year, India Today, 11 May 2026. 4 After delay, DGFT authorises 17 banks to import bullion for 3 years, Indian Express,17 April 2026 5 India imposes immediate restrictions on gold, silver and platinum jewellery imports to curb FTA misuse, NDTV Profit, 1 April 2026. 6 IGST is a tax on the supply of goods and services between states in India. 7 India's gold import crisis: Why banks halted shipments for a month and what it took to start again, Money Control, 12 May 2026. 8 Landed price is the international price (LBMA Gold Price AM) adjusted for import taxes. 9 Official domestic price is the landed prices which is the international price adjusted for import taxes. 10 Q3 2013 to Q1 2026. 11 Based on partial information 12 Reference page 128-132. Source： https://www.gold.org/goldhub/gold-focus/2026/05/india-gold-market-update-import-tightening

May 19, 2026 key takeaways. Gold’s recent price consolidation does not, in our view, undermine the medium-term case for higher prices Structural support remains intact, with resilient central bank and private investor demand, reflecting broad fiscal uncertainty and currency concerns The key risks to watch would be a shift to more restrictive central bank policies that pushes real yields higher for longer, or a deterioration in passive fund flows We stay constructive on gold, maintain our overweight allocation in portfolios, and keep our 12-month price target at USD 5,400/oz. Gold has been one of the defining financial assets of the last 12 months. Yet after a strong performance, especially in the second half of 2025, prices have stalled. Momentum has cooled, and the metal has at times lagged what investors might have expected from a haven asset during a period of geopolitical stress. Gold has been one of the defining financial assets of the last 12 months. Yet after a strong performance, especially in the second half of 2025, prices have stalled. Momentum has cooled, and the metal has at times lagged what investors might have expected from a haven asset during a period of geopolitical stress. Gold prices more than doubled in the year to January 2026, reaching a record USD 5,595 per ounce before declining in the wake of the Middle East conflict to a trough of USD 4,099/oz in mid-March, most recently reaching USD 4,560/oz. In contrast to comparable periods of geopolitical tension – such as the Iranian Revolution in 1979, the first and second Gulf Wars, or Russia’s invasion of Ukraine – gold has seen a larger drawdown with much higher levels of volatility. It has fallen by over 10% since the conflict began. We believe this reflects market concerns over inflation and crowded investor positioning at the start of 2026. As a non-yielding asset, gold performs best when real yields decline and the US dollar depreciates. However, an energy supply shock can have the opposite effect, resulting in markets pricing higher central bank rate expectations, higher yields and a firmer US dollar. It is therefore unsurprising that gold has shown a strong negative relationship with rising energy prices. If the Middle East conflict de-escalates and energy prices fall, in line with our base scenario, gold could recover, supported by some normalising of previously high investor positioning. Gold prices more than doubled in the year to January 2026, reaching a record USD 5,595 per ounce… Still, the Middle East conflict is not the only variable for prices. The medium-term outlook is also determined by whether demand and the broader geopolitical and fundamental macroeconomic environment have changed. Here, we do not see a shift and therefore remain constructive on gold, maintaining our 12-month price target of USD 5,400/oz, and our overweight allocation in portfolios. To understand gold’s recent loss of momentum, it helps to separate structural from short-term drivers. At the structural level, demand from both central banks and private investors remains resilient. This explains how short-term headwinds – including a stronger dollar and higher bond yields – can create temporary weakness without undermining longer-run demand. In other words, slowing momentum should not be mistaken for a structural reversal. Structural incentives to hold gold The most compelling structural case for gold lies in incentives for investors, private and public, to hold a real asset. Yet unlike most currencies, where supply can expand due to monetary and fiscal easing, gold supply has been stable through history: industry estimates suggest some 220,000 tonnes of gold have been mined throughout history, with new mine output adding just over 1% to above-ground stocks each year . Moreover, unlike currencies, gold is not subject to financial sanctions. US sanctions on Russia accelerated central banks’ desire to hold reserve assets such as gold that are insulated from such threats while preserving value. As more countries gradually diversify away from use of the US dollar and settle trade in other currencies, demand for neutral reserve assets such as gold rises. At the structural level, demand from both central banks and private investors remains resilient At the same time, lower confidence in some currencies has supported private investor demand, especially as gold helps portfolio diversification. Persistent fiscal uncertainty and still-high inflation reinforce this trend. When investors question the long-term path of public debt, the capacity to finance deficits, or policy credibility, demand for diversified assets increases. In this environment, gold can provide a hedge against risks that are hard to manage – including inflation surprises, poor management of government finances that ends up constraining monetary policy, or declining confidence in institutions. The price of gold, for example, has recently correlated with fears around the Federal Reserve’s independence. Persistent demand trends contribute to price appreciation Over the past decade, there has been a strong link between total gold volumes bought by both private investors and central banks, and real gold prices. Approximately 400 metric tonnes of quarterly demand is consistent with price stability, with every additional 100 tonnes associated with roughly a three-percentage-point rise in quarterly prices. Since 2023, demand has averaged about 620 tonnes a quarter, well above the 450-tonne average between 2010 and 2022. Despite concerns about weaker demand this year, World Gold Council data shows total demand of 790 tonnes over the first quarter of 2026, of which central banks purchased a net 244 tonnes, a 3% increase year on year. Private demand was roughly in line with 2025’s average. Lower ETF flows were offset by higher demand for physical gold, with China accounting for 40% of the total. Central banks can create a higher ‘floor’ From 1980 to 2005, central banks reduced their gold reserves, and that trend accelerated after the Cold War with globalisation, and US security guarantees for allies. However, recent years have re-set international relations, and central banks have rapidly increased their gold purchases . The rationale is straightforward: reserve managers’ gold purchases reflect concerns about US financial sanctions, broader geopolitical uncertainty, and unpredictable trade policies. The share of gold in overall reserves held by emerging market central banks is still less than their developed market peers While demand has been strongest in emerging countries, a structurally higher baseline of purchases by central banks across many countries can reduce the depth and duration of any price falls, particularly if private investor flows become volatile. Importantly, the share of gold in overall reserves held by emerging market central banks is still less than their developed market peers, suggesting more room for buying. As a result, such demand is likely to remain. Recently, some emerging market countries, such as Turkey, have sold or swapped gold reserves to manage currency depreciation pressures exacerbated by the conflict in the Middle East. We see such moves as exceptions to the broader trend of purchases in countries with free-floating exchange rates. Real yields and monetary credibility The outlook for interest rates and their impact on private investor flows will be another key factor for gold prices. Gold is sensitive to real yields: when they fall, the opportunity cost of holding gold declines, supporting prices. This link has re-asserted itself in recent months. In principle, a more restrictive Federal Reserve monetary policy could weigh on gold prices if it resulted in persistently higher real yields. However, we see this risk as limited. The Fed is likely to keep policy rates on hold for much of 2026, with any rate cut more likely towards the end of the year. Rate moves matter for investor flows into the gold market. Physically-backed ETFs, which allow investors to gain exposure to gold without owning the metal, tend to be sensitive to rate expectations. Even after strong inflows, total ETF holdings are not back to their historical highs. Broadly stable flows would support demand. We therefore remain constructive on gold, maintaining our overweight allocation and our 12‑month price target of USD 5,400/oz The structural case remains intact We do not expect the recent gold price consolidation to alter its medium-term trajectory. Cooling investor sentiment does not undermine the structural case for gold, but instead shifts focus back to slower-moving drivers including central bank demand, portfolio allocation and fiscal uncertainty. Three factors support this view. First, demand remains resilient despite volatility. Second, the macro context still favours real assets amid fiscal uncertainty and the gradual erosion of purchasing power. Third, recent headwinds look short term rather than structural – including higher yields and a stronger US dollar, which we see as temporary. Risks remain. Negative factors to watch would be higher-for-longer real yields, a prolonged decline in ETF demand, or lower physical demand, for example for jewellery, even if that were partly offset by central bank buying. We therefore remain constructive on gold, maintaining our overweight allocation and our 12-month price target of USD 5,400/oz. Our structural case for the precious metal rests on resilient demand, fiscal uncertainty and the gradual erosion of US dollar purchasing power. Source： https://www.lombardodier.com/insights/2026/may/gold-s-slowdown.html

Published: May 19, 2026 - 10:43 PM Updated: May 19, 2026 - 10:55 PM (Kitco News) – Despite Iran war headwinds, gold prices are still on track to reach a fresh all-time high of $5,800 per ounce before year-end, while silver’s supply deficit and dual demand make it the better medium-term bet, according to Nicky Shiels, head of research and metals strategy at MKS PAMP, Shiels said in a recent interview that the Iran war has “reshaped, but not derailed” the bull case for gold, and she expects the yellow metal will ultimately gain 30% in 2026. “Gold is still expected to average $4,500/oz in 2026, with a new higher all-time high of $5,800/oz a fair target for the second half of the year,” she said. “Gold has morphed from a debasement trade into an inverse oil proxy during the current conflict, and while that correlation has weakened recently, the stagflationary backdrop comes back into play,” Shiels added. “The near-term thesis is one of consolidation, but the longer-term one reinforces the bull case for gold: fiscal dominance fears, US dollar weakness longer-term, and geopolitical risk remain in play.” In the near term, she said that “gold prices below $5000/oz are fair given current oil levels and softening physical demand into the summer, but $5000+ should be the range in 2H’26.” Looking further out, Shiels is even more bullish. She said that it is “unlikely, but possible” that gold prices will reach $10,000 per ounce by 2030. “It’s theoretically possible, as real assets continue to debase higher,” she said. “A lot would have to happen for gold prices to reach five figures, including a substantial rotation from US institutional investors out of equities.” “There are plenty of narratives explaining how one obtains big numbers, where most look at Gold through a debasement lens and adjust for what prices need to be (keeping all other inputs stable) to reach historical relative values vs the stock market, vs % of US debt, as vs % of foreign-held portion of US debt,” Shiels explained. “For example, gold’s global market cap (value of above-ground stocks) is around 20 per cent of the value of the global stock market. Historically, it can be worth 40 per cent, simply implying Gold at $10,000/oz (with no drawdown in stock market value).” She also benchmarked gold’s potential against U.S. government debt to arrive at an even more dramatic price projection. “Today’s US Gold holdings backs only 3 per cent of US government debt; back in the previous wartime era (the last debt expansion era), WWII, in which ~50 per cent of federal debt was Gold-backed; a mere 10 per cent of the US’ debt pile today equates to $15,000/oz,” Shiels said. “The value of the US’ Gold (81100 tonnes) is 14 per cent of all foreign-held US debt; the long-term average has been 50 per cent, which implies ~$18,000/oz.” She added that the scenario “remains a tail, not the base case, but it’s not an unreasonable tail.” Turning to silver, Shiels said that while gold still has the better outlook for 2026, the gray metal could outperform it in the longer term on the back of ongoing structural supply deficits. “The January high above $120/oz can absolutely be revisited, but it’s contingent on gold making new all-time highs,” she said. “Silver is still nowhere near its inflation-adjusted highs of around $200/oz (when Gold took out its 1980 inflation-adjusted high of $3600/oz back in September 2025), which requires a lot to come together (retail, institutional investment, industrial & physical flows re-engaging simultaneously).” Shiels said the Iran war has generated significant headwinds for silver, with the oil shock creating a “stagflationary backdrop” and raising fears of industrial demand destruction. “Silver, as the ‘high-beta’ precious metal, is caught between its monetary/investment and industrial identities,” she said. “Investment demand has softened while industrial demand faces macro pressure and fears over a growth slowdown.” “The core bear case [revolves around] a recession or prolonged stagflationary environment that would hit industrial demand (which accounts for over half of silver consumption) hard, particularly if the green energy buildout slows,” she explained. “That risk can overwhelm investment inflows and keep silver trapped in the lower half of its range, $50 – $70/oz.” But despite these risks to the outlook, Shiels believes silver is the precious metal with the higher upside over the longer term. “Gold has stronger institutional underpinning, resilient CB demand, clearer macro catalysts with a ramp up of stagflationary risks, and less vulnerability to an industrial demand shock,” she noted. “But silver is nowhere near its inflation-adjusted highs of around $200/oz; it faces persistent structural supply deficits where supply is slow to respond, and once both retail and institutional investment flows re-engage simultaneously, the squeeze potential is significant.” “Long-term, silver’s leverage to the hard-asset bull market is its biggest asset.” Moving to the platinum group metals, Shiels said the macro backdrop is weighing heavily on both platinum and palladium, but platinum is better positioned to launch a breakout due to ongoing supply deficits and strong hybrid vehicle demand. “January’s move in both metals reflected a genuine confluence of factors — physical tightness, tariff-driven trade re-ratings, supply disruption (particularly Russian palladium redirected away from the US), and strategic stockpiling — it wasn’t pure speculation,” she said. “However, the macro backdrop since then (oil shock, demand destruction fears, auto sector uncertainty) has weighed heavily.” “Platinum has stronger structural support — persistent multi-year deficits, growing hybrid autocatalyst demand, resilient industrial demand, steady jewellery demand, and a new investor base with the launch of futures contracts in China — so it’s better positioned to break out of the range,” she added. “Palladium is more policy-driven and heavily dependent on auto demand.” Source： https://www.kitco.com/news/article/2026-05-19/gold-will-hit-5800-ath-december-silver-has-highest-upside-platinum-has

Steep price reversal: Silver plunged nearly 11% and gold turned volatile after India hiked import duties to 15%, reversing initial post-hike gains. Policy-driven impact: The government raised duties to curb imports, protect forex reserves, and support the rupee amid the West Asia crisis. Market outlook: Higher tariffs may hurt demand, slow industrial imports, and prompt smuggling, while global inflation and dollar strength keep pressure on bullion. Immediate market reaction to duty hike The import duty increase from 6% to 15% on gold and silver triggered a dramatic reversal in silver prices, with MCX silver plunging nearly 11% or ₹32,624 per kilogram in just two sessions. Gold prices also turned volatile, with spot gold trading around 4% below its recent peak as inflation data and a stronger US dollar sapped momentum. The initial rally from higher landed costs was quickly erased as traders booked profits and demand weakened at elevated prices. Economic and policy rationale behind the hike The Finance Ministry's move to restore the earlier higher duty structure aims to curb non-essential imports, safeguard foreign exchange reserves, and support macroeconomic stability amid the West Asia crisis. Officials highlighted the need to prioritise forex for essential imports like crude oil and fertilisers, noting the rupee’s record low this year. The hike follows Prime Minister Modi’s call for citizens to avoid non-essential gold purchases, reversing 2024’s duty cuts intended to curb smuggling and aid the jewellery sector. Live Mint + 4 "The increase in customs duty on imports of gold, and precious metals announced by the government is aimed at safeguarding macroeconomic stability and conserving foreign exchange reserves. The measures have been taken also to moderate non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis." Fortune India Why volatility matters for India’s bullion market India, the world’s largest silver importer and second-largest gold consumer, faces potential demand destruction as higher tariffs lift local prices. Silver’s significant industrial demand—from solar panels to EVs—means it is trading more like an industrial commodity, making it sensitive to growth concerns from elevated oil prices. Analysts warn that reduced official imports could revive smuggling and dampen both jewellery and industrial demand, especially if geopolitical tensions keep inflation risks high. The Economic Times + 4 Short- and long-term outlook In the short term, bullion prices may remain range-bound as profit booking offsets structural support from central bank purchases and ETF inflows. Over the longer term, silver retains strong global demand drivers from AI infrastructure, green energy, and electronics, though a weaker economic outlook could limit gains. Policymakers face the challenge of balancing macroeconomic stability with potential social and market disruptions from sharp tax interventions. The Economic Times + 4 Source： https://www.msn.com/en-in/news/insight/gold-and-silver-prices-tumble-after-steep-import-duty-hike

May 17, 2026 HSBC has increased its silver price forecasts for both 2026 and 2027, although the bank continues to expect limited upside for the precious metal over the medium term. HSBC now projects silver will average $75 per troy ounce in 2026 and $68 per ounce in 2027, compared with previous forecasts of $68.25 and $57, respectively. Silver Rally Fueled by Safe-Haven Demand and Tight Supply Silver surged to a record nominal high of $121 per ounce in late January, supported by soaring gold prices, constrained supply conditions and strong safe-haven demand linked to tariff concerns and geopolitical tensions. The metal later pulled back sharply to around $64 per ounce in early February following a conflict-driven rise in the U.S. dollar and weakness in gold prices, before recovering to trade above $86 per ounce. HSBC Sees Smaller Supply Deficits Ahead Despite raising its price outlook, HSBC maintained a cautious stance, arguing that shrinking supply deficits and softer industrial and jewellery demand are likely to prevent sustained gains. The bank expects the global silver market deficit to narrow to 73 million ounces in 2026 from 143 million ounces in 2025, before tightening further to 25 million ounces in 2027 as mine production and recycling supply increase. “Moderating deficits, in our view, will not be sufficient to propel silver sharply higher for prolonged periods,” said James Steel, chief precious metals analyst at HSBC. The bank expects prices to weaken during the second half of both 2026 and 2027. Industrial and Jewellery Demand Expected to Ease Industrial demand, which accounts for more than half of global silver consumption, declined to 657 million ounces in 2025 from a record 679 million ounces the previous year. HSBC said manufacturers have increasingly sought to reduce or substitute silver usage in response to elevated prices, and the bank expects that trend to continue. The bank forecasts industrial silver demand will decline further to 642 million ounces in 2026 and 618 million ounces in 2027. Jewellery demand is also projected to fall to 157 million ounces this year from 189 million ounces in 2025. Supply Growth Seen Supporting Market Rebalancing On the supply side, HSBC expects mine production to remain broadly unchanged at 848 million ounces in 2026 before rising to 868 million ounces in 2027. Recycling supply is forecast to increase to 216 million ounces this year from 197 million ounces in 2025. Dollar Weakness and Geopolitics Could Offer Support James Steel said expectations for a weaker U.S. dollar and ongoing geopolitical uncertainty could continue to provide some support for silver prices. However, he cautioned that “the gold:silver ratio is likely to widen, allowing silver to ease even if gold rallies.” HSBC set year-end silver price targets of $70 per ounce for 2026 and $65 per ounce for 2027. Source: https://www.msn.com/en-us/money/savingandinvesting/hsbc-raises-silver-forecasts-for-2026-and-2027-but-warns-upside-may-be-limited