India’s gold market entered a cooling phase through May and early June, with jewellers facing weaker consumer demand amid higher import duties, elevated prices and increased market volatility, according to the latest World Gold Council market update.

Domestic gold prices climbed around 13% year-to-date by mid-June despite international prices remaining broadly flat. The rise was driven by the increase in import duty from 6% to 15% and depreciation of the Indian rupee, both of which pushed up local prices and influenced buying behaviour.

Key developments include:

• Domestic gold prices up around 13% year-to-date
• Import duty increased from 6% to 15%
• Price volatility encouraged consumers to delay purchases

The seasonal slowdown was further compounded by an inauspicious period in the Hindu calendar, leading to weaker retail footfalls across markets. Industry feedback also indicated subdued demand for bars and coins and a slower pace of new store openings.

Instead of making fresh purchases, many consumers opted to exchange old jewellery for new products. Retailers reported a notable increase in exchange-led transactions as buyers sought to manage higher gold prices.

Retail trends observed during the period:

• Old-gold exchange business increased by 5–15%
• Some jewellers reported exchanges accounting for 60–70% of total sales
• Market participants expect demand to remain soft through June and July before improving from August

Investment demand also moderated. Indian gold ETFs recorded net outflows of Rs 7.25 billion in May, the first monthly outflow since April 2025, although inflows resumed in early June. Digital gold purchases slowed month-on-month but continued to remain above their 16-month average.

Meanwhile, gold imports reflected the softer market environment following the duty revision.

Import and investment snapshot:

• Gold imports declined 39% month-on-month to $3.4 billion
• Estimated import volumes fell to 25–30 tonnes, compared with 46 tonnes in April
• Despite the monthly decline, imports remained 34% higher year-on-year
• ETF inflows resumed in early June after May's profit-booking cycle

The World Gold Council expects seasonal demand to strengthen from August as the festive and wedding buying cycle returns.