Budget 2025: Should you buy gold before budget? Check yellow metal price prediction HERE

Speculation is rife that the 2025 Union Budget might increase customs duty on gold, potentially pushing prices higher. Experts suggest that buying gold during the current price dip could be a strategic move.

In the full budget for 2025, presented on July 23, 2024, the customs duty on gold and silver bars was reduced from 15% to 6%. Subsequently, in August 2024, gold imports increased by approximately 104% year-on-year, reaching $10.06 billion. However, during the same period, India's gem and jewelry exports declined by over 23%, falling to $1.99 billion

In the last budget, the government reduced the customs duty on gold to stabilize prices and ensure adequate supply amid persistent inflation. However, the import duty reduction has raised concerns about increased gold consumption, potentially widening the trade deficit. India, the world's second-largest gold consumer, heavily relies on imports to meet its demand.

Should you buy gold before the 2025 budget?

Gold prices rose last week despite a strengthening dollar. Healthy demand from the gold market and weakness in the domestic stock market led to a continued rise in gold prices, up about 1% last week. As of last Friday, the price of gold rose by Rs. 480 per sovereign to Rs. 59,600. In this context, experts say that if the central government increases the customs duty on gold, the price of gold in the domestic market may rise further

Sukhanda Sachdeva, founder of SS Wealthstreet, said, "To curb the rising trend in gold, especially following the unprecedented reduction in import duties last year, the government may increase the basic customs duty on gold in the 2025 budget." She added, "An import duty hike will increase the landed cost of gold, consequently pushing up domestic prices. This makes buying gold during a price dip a strategic move, as investors can benefit from the anticipated price increase in the short term"

However, a customs duty hike isn't the only catalyst for gold prices. Experts say that even if the government doesn't touch the customs duty, gold prices could rise due to global uncertainty. Sukhanda Sachdeva said, "Even without a tax hike, the global economic landscape remains uncertain. Policy changes in US President Donald Trump's second term could increase gold's safe-haven appeal. Market participants will also closely watch the US Federal Reserve's policy meeting scheduled for later this month. With core inflation easing in December, which has been sticky for the past two months, the Federal Reserve may reconsider its stance on interest rate cuts, which could support gold prices."

Anuj Gupta, Head of Commodities and Currencies at HDFC Securities, highlighted that gold prices in the coming weeks will be dominated by the "Trump factor" and the Union Budget 2025. He said, "Amidst the buzz of a US Federal Reserve interest rate cut, the market is keen to know the US economic outlook of the Donald Trump administration. In the domestic market, there is a buzz about a customs duty hike on nearly 20 items, including gold. If this happens, the price of gold could rise significantly. Therefore, any current decline in gold prices should be considered an opportunity to buy gold before the 2025 Union Budget."