Gold Demand Falls Over 70% Following Duty Hike as Households Sell Old Jewellery: IBJA

India's gold market has witnessed a sharp decline in buying activity after the customs duty on gold was increased from 6% to 15% on 13 May 2026.  

The slowdown has coincided with a correction in gold prices, resulting in lower demand, higher sales of old jewellery and increased gold loan activity. 

Price Correction Changes Market Activity 

Gold rose above ₹1,80,000 ($5,600) per 10 grams on 29 January 2026, before declining nearly 30% to around ₹1,40,000 ($3,960) by 30 June 2026. Despite the decline, prices remain above the ₹95,600 per 10 grams level recorded a year earlier. 

As per news reports, according to Surendra Mehta, Secretary, India Bullion Jewellers Association (IBJA), "The current market sentiment is not good at all," adding that consumers and investors were selling gold in the open market "in fear of further downside in gold prices." 

Demand Declines as Old Jewellery Sales Increase 

Mehta said "Gold demand has dropped by more than 70 percent in the Indian market after the duty hike." He also said demand "has remained on the lower side" after Prime Minister Narendra Modi urged citizens to postpone gold purchases for one year. 

According to his estimates, sales of old gold during April-June 2026 may reach nearly 50 tonnes, representing more than a 50% increase compared with the corresponding period last year. The correction in gold prices has also been accompanied by higher demand for gold loans. 

Industry Assessment 

According to the 30 June 2026 Augmont Bullion Report, gold slipped below $4,000, its lowest level in nearly eight months, and is heading for a fourth consecutive monthly decline amid Middle East tensions and expectations of higher US interest rates. 

The report stated that gold has declined more than 12% during the month and nearly 15% during the quarter, marking its steepest quarterly fall since 2013.  

It added that a breakdown below $3,960 (₹1,40,000) "could pave the way to $3,600 (₹1,30,000)," while "a relief rally toward $4,100 (₹1,45,000) and $4,165 (₹1,47,000) remains a credible scenario." 

Read More: India’s Gold Imports Decline Sharply After Duty Hike, Fall to 25-30 Tonnes a Month! 

Conclusion 

The customs duty increase and the subsequent correction in gold prices have coincided with weaker demand, higher sales of old jewellery and changing market activity in the domestic bullion market.   

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