India's Gold Demand Dips Amid Seasonal Slump and Rising Customs Duty

India's gold demand dropped by 6% in Q2 2026 to 131.4 tonnes, according to the World Gold Council's latest report. This decline was attributed to subdued seasonal demand, higher customs duty, and a shift in consumer sentiment.

The jewellery consumption witnessed the sharpest decline, falling 15% year-on-year to 75.1 tonnes from 88.8 tonnes in the same period last year. This drop comes after Prime Minister Narendra Modi's appeal in May for citizens to curb non-essential gold purchases and consider alternative savings avenues.

The prices of gold and silver on the Multi Commodity Exchange (MCX) dropped by up to 1% due to profit booking ahead of the US Federal Reserve's policy decision. Analysts believe that the underlying safe-haven appeal of precious metals will likely be reignited, despite the US Fed's commitment to a strict 2% inflation target.

The upcoming festive season in India and holiday season in the West are expected to play a crucial role in defining the performance of gold, and ultimately, jewellery sales. The RBI Monetary Policy next week along with the US Fed's decision in September will be key factors in determining the yellow metal's future.