Gold down 24% globally but only 20% in India as import duty and weak rupee cushion fall

Gold prices in markets around the world are falling sharply. On Friday, spot gold closed at $4,068.71 an ounce. Gold had touched a record $5,379 on January 29, 2026, and the current price is about 24 per cent below that. When an asset falls 20 per cent or more from its record level, it is classed as being in a bear market, or a steep downturn.

The picture in India is somewhat different. According to the All India Sarafa Association, 99.9 per cent pure gold closed at Rs 1,46,300 per 10 grams in Delhi on Dhanteras. On January 29, the same gold had reached a record Rs 1,83,000. That is a fall of about 20 per cent. The question is how and why Indian buyers got a 4 per cent advantage.

The answer lies in the Government of India's tax policy and the currency market. India imports most of its gold. So, besides the international rate, the price of gold in the country depends on two major factors.

The first is the import duty. In January, when gold was at a record high, India levied a 6 per cent import duty on it. On May 13, the government changed this and raised the effective duty on gold and silver to 15 per cent. This includes 10 per cent basic customs duty and 5 per cent agriculture infrastructure cess.

The aim of the decision was to cut imports so as to ease pressure on the rupee and the foreign exchange reserves, both of which were already under strain because of higher international oil prices. The decision came only a few days after Prime Minister Narendra Modi appealed to people not to buy gold for a year. The 9 percentage point increase in duty largely reduced the impact of the fall in the international market, and prices here did not fall as much as they did worldwide.

The second factor is the weak rupee. Gold prices are linked to the dollar. So even if nothing changes in the global market, gold becomes costlier in the local market if the rupee weakens. On January 29, the rupee was at about 92 against the dollar, which was then its lowest level ever.

This means Indian importers now have to pay more rupees to buy gold from abroad. As a result, the fall in gold prices in the country was checked. This is why gold in India fell by only 20 per cent rather than 24 per cent.