Gold prices have plummeted globally, but Indian buyers are seeing a smaller drop compared to international markets. Global spot gold has fallen around 24% from its January 2026 peak, while prices in Delhi have declined approximately 20% over the same period. This discrepancy is due to three key factors: higher import duty, a weaker rupee, and unusually high premiums charged by domestic traders when gold prices were at their highest.
The Indian government raised the effective import duty on gold from 6% to 15% on 13 May 2026, which included a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC). This increase cushioned the impact of falling international prices on the domestic market. International gold prices dropped from a record high of $5,379 an ounce on 29 January 2026 to $4,068.71 on 6 November 2026, while 99.9% pure gold in Delhi fell from ₹1,83,000 per 10 grams to ₹1,46,300 per 10 grams on Dhanteras.
The rupee's depreciation has also played a role in limiting the fall in domestic gold prices. The rupee weakened from around ₹92 against the dollar in January to a record low of ₹96.96 in May before recovering slightly to ₹93.905 on 6 November. This depreciation partly offset the decline in international gold prices, meaning Indian buyers did not fully benefit from the global price correction.
Another factor contributing to the domestic price correction was the removal of unusually high premiums charged by bullion traders in January. Traders had anticipated a higher import duty ahead of the Union Budget, leading to premiums of up to $112 an ounce. However, the Budget did not increase duties, and when the government raised them in May, dealers offered discounts of up to $207 an ounce. By mid-October, premiums had normalized, contributing to the subsequent domestic price correction.
Despite the smaller decline in domestic gold prices, Indian consumers are still paying higher prices compared to last year. Gold in Delhi was around 10% more expensive on Dhanteras this year than in 2025. The higher prices have led to a projected decline in India's gold demand to around 650 tonnes in 2026, the lowest level since 2020. For buyers, tracking international gold prices alone may not provide an accurate picture of domestic prices, as import duty, the rupee-dollar exchange rate, and local premiums also play significant roles.