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Informist, Thursday, Jun. 18, 2026

 

NEW DELHI – Domestic gold prices have eased nearly 4% in the first half of June on subdued demand, but have risen over 13% from January levels amid an import duty hike and a weak rupee, the World Gold Council said. Meanwhile, jewellers' discounts have retreated in June from the deep discounts offered after New Delhi hiked import duty in May, it added. 

 

India raised import duty on gold and silver to 15% from 6% on May 13 to reduce the country's import bill and save foreign exchange. The council estimates gold imports fell to 25-30 tonnes in May from 46 tonnes in April, reflecting a moderation in demand as the higher duty structure took effect. In value terms, gold imports fell 39% on month to $3.4 billion, but rose 34% on year.

 

On prices, the council said: "As of 15 June, international and domestic gold prices were down 4.2% and 3.7%, respectively, from the end of May." However, year-to-date performance diverged. "While international prices are broadly flat, domestic prices are up around 13.2%, largely reflecting the 9% increase in import duty in mid-May, and the 5.3?preciation in the INR against the US dollar."

 

Gold prices have fallen amid increased expectations of major central banks tightening their monetary policy, raising the opportunity cost of gold. "Improved investor risk sentiment and ETF outflows have weighed on investment demand, too, contributing to the recent softening in prices," the council said. 

 

Meanwhile, jewellers' discounts have narrowed materially to $25 per ounce as of Jun. 15 from the deep discounts of $150 per ounce after New Delhi hiked gold import duty, the council said. Discounts were huge as higher domestic prices boosted supply but pressured physical demand. Bullion dealers likely offloaded gold imported before the duty hike and higher inflows of old gold jewellery exchanged for new. 

 

However, discounts have narrowed since the second week of June, indicating the normalisation of the demand-supply dynamics. "Lower availability of opportunistic supply, together with some pick-up in buying from select segments, likely contributed to the narrowing of discounts," the council said. 

 

Meanwhile, gold jewellery demand remained subdued through May and early June, a seasonally soft period. Demand for gold bars and coins was also broadly stagnant, reflecting the moderate mood across the trade. 

 

"Stakeholder interactions indicate that the Prime Minister's appeal to limit gold buying weighed on discretionary purchases, particularly in urban markets, although its effect appears more limited in rural areas where there is relatively limited reach in social media and related messaging," the council said. 

 

POSITIVE ETF FLOWS 

After continuous inflows into gold exchange-traded funds for 12 months, gold ETFs recorded an all-time high net outflows of INR 7.25 billion in May. Outflows were likely driven by profit-taking as domestic gold prices rose around 6% soon after the 9% hike in import duty, prompting investors to lock in gains. 

 

But the outflows appear to have been short lived. "Flows turned positive again in early June, with net inflows of INR 16.31bn ($171 million) between 1–11 June, suggesting that investor interest in gold ETFs remains strong," the council said. 

 

Several fund houses in India introduced temporary limits on large investments into gold ETFs and gold ETF fund-of-funds amid broader concerns around gold imports, external balances, currency pressures, and the Prime Minister's appeal to consumers to curtail their gold buying. "Given that large investors account for a sizeable proportion of AUM, the cap on investment could limit inflows into fund houses to some extent, although they can continue to buy from the secondary market where authorised participants and market makers continue to operate and provide liquidity," the council said. 

 

Meanwhile, India's digital gold through the Unified Payments Interface has seen a slowdown in both value and volume terms during May, but buying interest remains relatively strong. End

 

US$1 = INR 94.33

 

Reported by Afra Abubacker

Edited by Deepshikha Bhardwaj

 

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