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Informist, Friday, May 22, 2026

MUMBAI – Gold demand in India is expected to moderate in 2026, with jewellery and bar demand declining by around 50–60 tonnes, about 10% lower than the previous year due to the impact of the import duty hike, World Gold Council said in a report. But the impact of a higher import duty differs across jewellery and investment products such as bars and coins, according to the report.

Investment demand could be more affected due to the impact of the import duty hike, the report said. Periods of high import duties have generally coincided with a moderation in demand, particularly for bars and coins, it said.

On other hand, jewellery demand has shown greater resilience as its consumption is influenced more by prices and inflation, and import duties have less of an impact as jewellery purchases often tend to be a requirement, particularly for weddings and social occasions, the council said.

However, share prices of listed jewellers fell by 2–17% following the duty hike, reflecting expectations of weaker discretionary demand. Market feedback and trade interactions suggested a varied impact across segments, with many retailers indicating a likely pause in procurement, it said. 

Meanwhile, large chain stores saw a brief period of panic buying after the announcement, driven by expectations of further measures, and while they expected a slowdown in sales, they remained relatively resilient given inventory buffers and continued support from bridal demand. Mid-sized and regional players continue to see buying from affluent customers but are expecting to rely more on exchange programmes and tighter inventory cycles going forward, the council said. 

Smaller retailers were the most vulnerable due to persistently high prices. They will now face added pressure from sales volumes and profit margins, according to the report.

In the immediate aftermath of the import duty hike, domestic gold was traded at a steep discount to official prices, widening from an average of $14 per ounce the week prior to the duty hike to nearly $150 per ounce, it said. The rise in domestic prices post the duty hike triggered profit-taking by investors, boosting supply even as physical buying weakened, and bullion dealers likely offloaded inventory imported at lower duty rates, adding to market supply.

Changes in import duties tend to impact gold demand in both the short and long term, it said. Other factors, such as gold price, changes to income levels, inflation, or effects from the monsoon would further influence annual demand, according to the report. 

GOLD ETF

Gold exchange traded funds experienced outflows following the import duty hike, with redemptions from May 13–18 largely reversing earlier gains. On a month-to-day basis, however, demand remained marginally positive at around INR 1 billion, the report said.

Indian gold exchange traded fund attracted inflows in April, marking the 12th consecutive month of positive flows, it said. Net inflows stood at INR 30.4 billion, it said. 

Cumulative holdings rose by 1.1 tonne to 116.7 tonnes, while assets under management stood at INR 1.78 trillion, a modest 3% decline from January, largely due to softer gold prices. Investor participation remained healthy, with folios reaching 12.5 million, although growth slowed in April, with folio additions of 77,413--the lowest since September 2024, according to the report.  End

US$1 = INR 95.69

Reported by Taniva Singha Roy

Edited by Akul Nishant Akhoury

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