Gold discounts in India reached unprecedented levels of over $200 per ounce on Wednesday, as a rise in prices following an increase in import duties led to heightened investor selling in a sluggish demand environment, according to bullion dealers speaking to Reuters.
On Wednesday, the Indian government raised import tariffs on gold and silver to 15% from 6%, aiming to curb overseas purchases and alleviate pressure on the nation’s foreign exchange reserves.
“Discount levels were extreme in the physical market. We were double-checking prices before executing deals,” remarked a head of a bullion division at a Mumbai-based private bank, who has over two decades of experience in gold trading.
Investor Selling Intensifies Amid Weak Demand
Gold dealers in India offered discounts of up to $207 an ounce above official domestic prices on Wednesday, which included the 15% import and 3% sales levies, significantly up from the $17 per ounce on Tuesday.
The duty hike led to a sharp rise in local gold prices, prompting some investors to offload gold to realize profits, even at substantial discounts, noted another dealer at a private bank in Mumbai.
Both dealers requested anonymity due to restrictions on speaking to the media.
In the world’s second largest gold-consuming market, gold futures surged 7.2% on Wednesday, hitting 164,497 rupees per 10 grams, the highest price in more than two months.
Investors have been profiting from gold exchange-traded funds (ETFs), contributing to increased supply in the market, according to the bullion dealer.
Retail buyers and jewellers remained cautious, which compounded selling pressure and led to unusually high discount levels, commented Ashok Jain, proprietor of the Mumbai-based gold wholesaler Chenaji Narsinghji.
Bullion Dealers Warn of Smuggling Risk
Bullion dealers expressed concerns that the recent increase in import duties might exacerbate smuggling issues, as it expanded margins for grey-market operators to approximately 18%, up from around 9%, according to a dealer based in Chennai.
Grey market operators smuggle gold into the country and sell it for cash to evade duties, allowing them to offer prices below market rates by avoiding taxes.
Published on May 14, 2026.
