Gold Prices Hit Record Highs as India's Demand Plummets 70%

The Indian gold market is witnessing a historic paradox. On one hand, prices have reached staggering new heights, with 24-carat gold crossing ₹1.62 lakh per 10 grams in some markets. On the other hand, the appetite for the yellow metal has taken a massive hit, plummeting by nearly 70% over the last fortnight.

The primary driver behind this sudden cooling of demand is the government's decision to hike import duties from 6% to 15%, effective from May 13. Industry estimates show that demand fell to just 7.5 tonnes in the two weeks ending May 27, compared to 25 tonnes during the same period last year. This sharp rise in costs, combined with increasing prices for everyday essentials like food and fuel, has left many middle-class buyers hesitant to invest in jewelry.

Despite the drop in local demand, retail prices remain elevated due to firm global trends and a weakening US dollar. In Delhi’s bullion market, gold prices recently surged to ₹1.62 lakh per 10 grams, while silver climbed near ₹2.80 lakh per kilogram. Chennai currently reported the highest gold prices among key metros, with 24-carat gold trading at ₹1,59,290 per 10 grams. Other major hubs like Mumbai, Kolkata, and Delhi are seeing morning rates for 24-carat gold fluctuate around ₹1.57 lakh.

While festive and wedding-related demand usually provides a safety net for the market, the sheer weight of the import duty hike is rattling consumers. Investors are now keeping a close eye on global cues and potential diplomatic developments that could influence future price movements. For now, the gold fever seems to be cooling down as Indian households tighten their belts in response to the record-breaking costs.

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