Gold Demand in India Falls Over 70% as Households Rush to Sell Old Jewellery After Duty Hike

Yugcharan News | July 3, 2026

India's gold market has witnessed a sharp slowdown in buying activity, with demand for the precious metal reportedly falling by more than 70% following the government's increase in import duty earlier this year. Industry experts say the combination of higher duties, declining prices and uncertainty over future market trends has significantly altered consumer behaviour, leading many households to sell existing gold jewellery instead of purchasing new ornaments.

According to the India Bullion and Jewellers Association (IBJA), the domestic gold market has experienced one of its weakest demand phases in recent years. The slowdown comes after the Centre raised customs duty on gold from 6% to 15% in May 2026, a move aimed at reducing imports and supporting broader economic objectives.

Surendra Mehta, Secretary of the IBJA, stated that consumer demand has dropped by over 70% since the duty revision. He noted that many buyers have chosen to postpone fresh purchases, while a growing number of households are cashing in on old jewellery due to concerns that prices could decline further.

Traditionally regarded as one of the safest investment options in India, gold has been under pressure in recent months as international prices corrected sharply. After touching record highs earlier this year, gold prices have declined substantially, changing investor sentiment and reducing enthusiasm among retail buyers.

Market analysts believe the correction has created uncertainty rather than encouraging fresh buying. Many consumers who had purchased gold at higher levels are now choosing to liquidate their holdings while prices remain relatively elevated compared to previous years. This trend has resulted in increased supplies of old jewellery entering the market.

Industry estimates indicate that sales of old gold during the April-June quarter of 2026 may approach 50 tonnes, representing a significant increase compared to the same period last year. Jewellers across several cities have reported higher volumes of customers visiting stores to sell ornaments instead of purchasing new jewellery.

Experts attribute this shift not only to falling prices but also to uncertainty regarding future market movements. Investors remain cautious because of global economic conditions, expectations surrounding interest rates in major economies and fluctuations in international bullion markets.

Global gold prices have remained under pressure amid expectations that higher interest rates could continue for a longer period. As interest-bearing assets become more attractive, investor demand for non-yielding assets such as gold tends to weaken. This has contributed to the recent decline in bullion prices across international markets.

The IBJA also observed that many consumers fear further price corrections. As a result, rather than accumulating additional gold, they are opting to monetise existing jewellery and lock in profits earned during the prolonged rally witnessed over the past few years.

Analysts believe this behavioural shift is unusual for the Indian market, where gold has traditionally been viewed as a long-term store of wealth and an essential part of family savings. Weddings, festivals and religious occasions generally sustain strong jewellery demand throughout the year, but current market conditions have led many families to postpone discretionary purchases.

The decline in demand has also affected jewellery retailers, many of whom are witnessing lower footfall despite seasonal offers and promotional discounts. Industry representatives say customers are spending more time evaluating prices before making purchases and are increasingly preferring lightweight jewellery or exchanging old ornaments instead of buying fresh gold outright.

Meanwhile, financial institutions have also reported growing interest in gold-backed loans. As households sell or pledge existing jewellery to meet financial requirements, lenders dealing in gold loans are witnessing increased customer activity. Analysts say this reflects changing consumer priorities amid volatile market conditions.

While demand has weakened, industry experts maintain that gold continues to play an important role in diversified investment portfolios. However, they advise investors to avoid making decisions based solely on short-term price movements and instead consider their long-term financial objectives.

The brokerage community has also pointed out that future price direction will depend on several global factors, including inflation trends, monetary policy decisions by major central banks, geopolitical developments and movements in the US dollar.

Experts further believe that if global economic uncertainty increases again, gold could regain its appeal as a safe-haven asset. Conversely, if interest rates remain elevated and economic growth stabilises, bullion prices may continue to face pressure over the coming months.

For now, India's gold market appears to be undergoing a period of adjustment. Higher import duties, declining international prices and cautious consumer sentiment have combined to reduce fresh purchases while encouraging households to monetise existing jewellery.

Industry participants will closely monitor demand during the upcoming festive and wedding seasons, which traditionally account for a significant portion of annual gold sales. A recovery in consumer confidence during these periods could help revive jewellery demand, although much will depend on price stability and broader economic conditions.

Despite the present slowdown, analysts believe India's long-standing cultural and investment preference for gold is unlikely to disappear. Instead, consumers are expected to remain selective and price-conscious until greater clarity emerges regarding future market trends.