Gold, Silver Prices Fall Sharply as Demand Weakens Amid Higher Import Duty

Gold and silver prices witnessed a sharp decline at the start of July, reflecting weaker demand in both domestic and international markets. The latest price movement has prompted buyers and investors to adopt a cautious approach, while jewellers are reporting a slowdown in sales.

Gold and Silver Prices Decline

According to the latest market data released on July 1, international gold prices on COMEX fell by 1.19%, dropping $47.90 to trade at around $3,990.60 per ounce. Silver prices also declined by 2.63%.

In the domestic market, the Multi Commodity Exchange (MCX) mirrored the global trend. Gold prices dropped by nearly ₹1,155, trading at around ₹1,42,531 per 10 grams, while silver fell by approximately ₹3,810, reaching around ₹2,25,000.

Higher Import Duty Hits Demand

Market experts attribute the slowdown largely to the government’s decision to increase the gold import duty from 6% to 15%. With GST included, the overall tax burden on gold has crossed 18%, making jewellery significantly more expensive for consumers.

Industry estimates suggest that gold demand has fallen by nearly 70%. While demand stood at around 25 tonnes during the second week of May, it has now dropped to nearly 7.5 tonnes, indicating a sharp decline in consumer buying.

Consumers Prefer Selling Over Buying

A notable trend emerging in the market is the growing number of people selling old gold instead of purchasing new jewellery. Between April and June 2026, many households reportedly sold existing gold ornaments to capitalise on higher prices, amid concerns that prices could soften in the future.

Government’s Objective and Market Outlook

The Centre’s decision to raise import duty is aimed at reducing gold imports, conserving foreign exchange reserves, easing pressure on the rupee, and controlling the country’s import bill. However, analysts warn that higher duties could encourage gold smuggling, posing challenges for the organised jewellery sector.

Despite the current slowdown, market experts believe demand could recover if prices moderate further, particularly during the upcoming festive and wedding season. Until then, the gold market is expected to remain in a cautious “wait-and-watch” phase.