Gold Futures Plunge 5% After STT Hike

New Delhi, Jul 23 (PTI) Gold prices plummeted by 5 per cent or Rs 3,702 to Rs 69,016 per 10 grams in futures trade on Tuesday after the government proposed to hike the securities transaction tax on futures and options trade.

On the Multi Commodity Exchange, gold contracts for August delivery plunged Rs 3,702 or 5.09 per cent to Rs 69,016 per 10 grams in a business turnover of 12,397 lots.

Silver prices also tumbled more than 5 per cent in futures.

On the Multi Commodity Exchange, silver contracts for September delivery declined by Rs 4,704 or 5.27 per cent to Rs 84,499 per kg in a business turnover of 25,350 lots.

Finance Minister Nirmala Sithraman on Tuesday proposed to increase the rate of securities transaction tax (STT) on futures and options (F&O) trade to discourage retail investors' participation in the risky instrument.

"It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded," she said in the Union Budget speech for FY2024-25.

"The market is currently responding with a short-term perspective, particularly concerning the Securities Transaction Tax (STT) adjustments in derivatives. This will undoubtedly impact the profitability of frequent traders," Vaibhav Porwal, Co-founder of Dezerv, said.

Globally, gold was trading 0.08 per cent higher at USD 2,444 per ounce in New York.