India Gold Market Cools as Imports, ETF Flows Retreat

Gold | 2026-06-22 08:01:46 | By Paul Ploumis

Higher import duties impacted gold imports, which declined 39% month-on-month to US$3.4 billion in May.

Summary

Gold demand slowed: Jewellery, bar, and coin demand weakened due to seasonal factors, elevated domestic prices, and price volatility.
Import duty impact: Higher import duties pushed domestic gold prices higher and led to a 39% month-on-month decline in gold imports during May.
ETF and market outlook: Indian gold ETFs recorded record net outflows in May, but investor sentiment improved in June, with demand expected to recover from August onward.

SEATTLE (Scrap Monster): India’s gold market witnessed a notable slowdown in demand during May and early June 2026. While international gold prices remained broadly flat year-to-date, domestic gold prices were up 13.2% as of mid-June, supported by a hike in import duties and an ongoing depreciation of the local currency against the U.S. dollar.

Following the import duty hike in mid-May, domestic gold prices briefly traded at steep discounts, with discounts widening to nearly US$150 per ounce. However, market conditions gradually normalized, with discounts narrowing to around US$25 per ounce by mid-June.

India Gold Prices Rise as Investment Demand Offsets Weak Jewellery Sales

Jewellery demand remained subdued, driven by the seasonal off-season and heightened price volatility. Industry participants reported weaker retail footfall, while demand for bars and coins also remained sluggish.

Indian gold exchange-traded funds (ETFs) recorded their first monthly net outflow since April 2025, with net outflows reaching a record INR 7.25 billion in May. However, improved investor sentiment in June resulted in renewed inflows.

Higher import duties impacted gold imports, which declined 39% month-on-month to US$3.4 billion in May. Despite the drop, imports remained 34% higher year-on-year.

According to market participants, domestic gold demand is expected to remain soft through June and July before improving from August onwards as the seasonal demand cycle kicks in.