India treats gold pullback as entry point despite global sell-off
Source: MCX, World Gold Council Gold Price Data as of July 23, 2026
Gold prices witnessed a sharp decline in June, with domestic prices falling by ~4% month-on-month to an average of Rs. 1.48 lakh crores, marking a six-month low in June. A stronger US dollar, rising expectations of US rate hikes, and a rotation towards equities in Western markets amid the West Asia conflict have weighed on international gold prices. At the same time, the price pullback has created a buying opportunity for investors waiting to enter the market, thereby cushioning the decline in prices, with inflows remaining healthy since June. However, domestic prices remain around 52% higher year-on-year, supported by the import duty hike and prevailing geopolitical conditions. Gold import duty was sharply increased from 6% to 15% in May-26, the steepest hike on record, along with broader regulatory tightening aimed at curbing imports amid rupee depreciation against the US dollar.
Globally, the West Asia conflict heightened inflation concerns, while global expectations of higher interest rates strengthened further. This anticipation contributed to rising real yields and a stronger dollar, increasing investors’ opportunity cost of holding gold. The notable pullback in gold prices during the month emerged as a key trigger for investors to reduce their allocation to gold ETFs. Outflows were recorded across major global markets in June, with global investors further trimming their gold ETF holdings and registering outflows of US$8.9bn, led by North America. However, India diverged from the trend, attracting inflows during the month as local investors remained optimistic about gold prices and viewed the dip as an entry opportunity.
In India, the pullback in gold prices and relative price stability have supported jewellery purchases. Notably, demand has not been restricted to wedding-related buying. Softer prices have moderated demand for bars and coins, which are typically purchased for investment purposes and tend to see stronger interest during periods of rising prices.
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