India gold buyers stay cautious as duty hike, price swings persist

India’s gold market stayed cautious as a sharp duty hike and volatile prices froze retail buying, with dealers saying customers were waiting for the market to settle after the government lifted import duty on gold and silver to 15% from 6% on May 13. Jewellers in Kolkata and Mumbai said the sudden move had unsettled bridal and festival purchasing plans, even as the wedding season was drawing to a close and stock-building turned riskier.

That hesitation showed up in pricing. Dealers quoted Indian gold at discounts of up to $78 an ounce to official domestic prices this week, inclusive of the 15% import levy and 3% sales levies, far narrower than the record discounts of up to $207 an ounce seen the previous week. A Kolkata-based jeweller said retail buyers were confused by the recent swings and were waiting for prices to settle, while a Mumbai-based bullion dealer said jewellers were reluctant to build stocks because demand was still uncertain.

China was softer too, though less dramatically. Bullion there traded at premiums of $10 to $20 an ounce over the global benchmark, down from $15 to $20 a week earlier. Bernard Sin of MKS PAMP said anxiety over higher U.S. rates, rising bond yields and dollar strength was weighing on gold in China, trimming the premium that local buyers were willing to pay.

The duty increase, a 9 percentage-point jump and the steepest on record, was part of a broader effort to moderate non-essential imports, ease pressure on foreign exchange reserves and support the rupee during a volatile stretch for commodities and geopolitics. Officials said the move was not meant to be prohibitory or anti-consumer, but the immediate effect has been to keep domestic gold prices at a deep discount to landed costs as weak demand and ample supply limit how much of the tax change can be passed through.

The World Gold Council said India’s jewellery and bar-and-coin demand could fall by 50 to 60 tonnes in 2026, or about 10% year on year. Even so, the latest import and spending data suggest demand is being delayed rather than destroyed: India’s average monthly gold imports rose to 83 tonnes in the first two months of 2026 from 53 tonnes on average in 2025, and first-quarter demand nearly doubled year on year to a record $25 billion in value terms. The next test is whether buyers return once prices steady, or whether retailers keep their inventories light until volatility finally eases.