After staying low for close to two months, the price of gold rose dramatically on Thursday, following the Central government’s announcement on a hike in import duty.

On Thursday evening, one gram of 22 carat gold cost Rs. 2,603, as against Wednesday’s price of Rs. 2,550.

Jewellers in the city said this was a steep hike for a single day, considering that the price had gone up only by a few rupees over the past few months. Since the price was already on the ascent due to the weakening of the rupee, the import duty hike would only lead to a further spiralling of the cost, jewellers said.

This is the second hike in import duty this year, and was made to rein in demand and import of the precious metal. This time, the import duty has been increased from 6 per cent to 8 per cent.

Members of the All India Gem and Jewellery Trade Federation plan to approach the Reserve Bank of India’s governor and other Central government officials to insist on a decrease in import duty.

The federation’s regional chairman N. Ananthapadmanabhan said that such measures would further encourage smuggling of gold. He said smuggled gold weighing one kg would now be cheaper by a minimum of Rs. 2 lakh.

“International gold rates have been stable. But the rates in the domestic market continue to surge as the rupee value is depreciating. The government should chalk out plans to provide interests on gold deposits and ban the sales of gold coins in banks,” he said.

Jewellery showrooms in the city meanwhile, are witnessing a decline in sales. A jeweller said sales of gold had been down by 20-25 per cent over the past few days, as several customers had other expenses such as school fees.

The price of one gram of silver too went up marginally from Rs. 47.40 on Wednesday to Rs. 47.50 on Thursday.

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