Gold and silver have been capturing investor attention like never before, consistently hitting record highs this year. Rising geopolitical and economic uncertainties, expectations of global rate cuts, and strong festive demand have boosted their appeal as both safe-haven and high-demand assets.
On September 3, the Indian government announced GST rate cuts on several products. Ahead of this, many expected a reduction in GST on gold and silver as well. But did the government actually slash rates on these metals?
In this article, we look at the changes and explore whether this is the right time for investors to buy gold.
What’s Happening?
The GST Council, led by Finance Minister Nirmala Sitharaman, announced the biggest reform since GST was introduced in 2017. The Council simplified the tax structure by merging the 12% and 28% slabs into two main rates, 5% and 18%.
Read our detailed coverage on GST 2.0: What’s cheaper and what’s costlier now
However, there has been no rate cut on gold and silver. They continue to attract 3% GST on value and 5% on jewellery-making charges. For instance, if you purchase gold and silver worth Rs 2 lakh, you will still pay around Rs 6,000 as GST.
Why Are Gold Prices Rising Continuously?
Geopolitical and economic uncertainties have pushed investors towards safe-haven assets, propelling gold past Rs 1 lakh for the first time on April 22. A weaker US dollar and expectations of a Fed rate cut further added to its appeal, with prices touching a new high of Rs 1,06,289 by September 3. Meanwhile, countries like India and China have been increasing gold reserves under de-dollarisation strategies, lending further support to demand.
On September 4, however, gold on MCX fell by more than 1% due to higher investor risk appetite and profit booking after the GST reforms. Despite this dip, expectations of a US Fed rate cut by September 17 have kept the long-term trend positive. Additionally, festive jewellery demand from Navratri to Diwali is expected to give prices another lift.
Gold and Silver Outperforming Nifty and Sensex
Gold and silver have outpaced Indian equities, with Nifty and Sensex struggling to post consistent gains. In the past year, Nifty delivered negative returns of around 1.84%, while in international markets, gold and silver prices surged nearly 42% and 45% respectively.
On a year-to-date basis till September 4, Nifty gained 4.18%, while gold and silver returned almost 33% and 39%. In just the last month alone, gold prices have risen around 8% ahead of the festive and wedding season, keeping investor sentiment upbeat.
What’s in it for Investors?
According to Live Mint, analysts suggest booking profits in gold and silver as both have nearly hit their target levels. Fresh buying should be considered only after a price correction, while short-selling is best avoided.
While the long-term outlook for gold remains strong, short-term investors could face risks if they enter after a sharp rally. Gold still holds value as part of a diversified portfolio, and any dip could be used as a buying opportunity.
What’s Next?
Although many expected gold to be included in the GST revamp, the rates remain unchanged. With cuts on electronics, cars, and air conditioners leaving consumers with more disposable income, some of that may still flow into gold purchases this festive and wedding season.
However, the steep price surge earlier this year had already impacted demand. During the summer weddings of 2025, many buyers skipped purchases, with sales reportedly dropping 50–90%, according to jeweller Mahaveer Bohra from Secunderabad, as quoted in The New Indian Express.
Experts believe festive demand may remain muted, with buyers preferring to exchange old jewellery instead of buying new pieces. Small cultural purchases like one-gram gold petals may continue, while NS Ramaswamy of Ventura suggests coins could be a better investment option than jewellery.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
