Gold Demand Plummets Over 70% After Steep Duty Hike as Indian Households Rush to Liquidate Stock

Gold Demand Plummets Over 70% After Steep Duty Hike as Indian Households Rush to Liquidate Stock​

A significant downturn in demand for gold has been reported in the domestic market following a sharp increase in import duties by the government. This move, coupled with earlier advisories regarding gold purchases, has prompted many consumers and investors to adopt a cautious approach toward precious metals.

Surendra Mehta, Secretary of the India Bullion Jewellers Association (IBJA), stated that gold demand has dropped by more than 70 percent in the Indian market after the duty hike. The customs duty on gold was increased by the Centre from 6 percent to 15 percent on May 13.

Mehta further noted that demand has remained subdued, referencing Prime Minister Narendra Modi's previous guidance asking citizens to postpone gold purchases for one year. In this volatile environment, many households are now actively selling their existing stock of old gold jewellery while prospective buyers exercise extreme caution.

Market Correction and Silver Rush in Gold Loans​

The sharp correction in gold prices has led to a surge in the demand for gold loans across the market. This rise is driven by investor expectations that further price declines may occur. Despite this downturn, current gold prices remain considerably higher than the Rs 95,600 level recorded one year prior.

One key metric from IBJA suggests that the sale of old gold between April and June 2026 could be nearing 50 tons. This volume represents a substantial increase exceeding 50 percent when compared to the same period in the previous year.

Global Outlook and Price Benchmarks​

The global trajectory for gold has recently seen notable volatility. Gold had previously surged past Rs 1,80,000 ($5,600) per 10 grams on January 29. Subsequently, it experienced a correction of nearly 30 percent, reaching Rs 1,40,000 ($3,960) by June 30, 2026.

The Augmont Bullion report (June 30) indicated that gold slipped below $4,000, marking its lowest point in almost eight months. The metal is currently heading toward a fourth consecutive monthly loss amid ongoing Middle East tensions and concerns over higher US interest rates.

Steep Decline and Future Price Scenarios​

The market data shows that the yellow metal has dropped over 12 percent this month and nearly 15 percent during the current quarter. This quarterly fall is noted as its steepest since 2013.

As per the Bullion report, gold has "cracked its critical $4,000 floor," sliding towards $3,960 (Rs 1,40,000). However, a confirmed breakdown could potentially lead to the $3,600 (Rs 1,30,000) level. Analysts note that a relief rally remains a credible scenario toward $4,100 (Rs 1,45,000) and $4,165 (Rs 1,47,000), given the current oversold conditions.