Gold sales in Zaveri Bazaar, India’s largest gold market, have slowed ahead of the upcoming Union Budget and concerns over potential US-imposed tariffs.
Traders and jewellers are cautious amid speculation that the government may raise import duties to address the trade deficit. The import duty on gold was reduced from 15% to 6% in the July 2024 budget, and there is uncertainty over whether it will be revised again.
Decline in Sales and Increase in Old Gold Transactions
According to “Surendra Mehta, secretary of the India Bullion & Jewellers Association,” gold sales in Zaveri Bazaar have dropped by 80% over the past four days compared to the previous week. At the same time, sales of old gold have increased as prices have risen.
Gold prices crossed ₹81,000 per 10 grams on Thursday, reaching ₹81,006 per 10 grams when the physical market opened at noon. “Generally, 0.75 tonne of old gold comes to the market every week which is used for recycling, and new jewellery is also bought by the customers. But this week, 3 tonnes of old gold has already come to the market, according to reports trickling in from different parts of the country,” Mehta stated.
Potential US Tariffs Add to Market Uncertainty
Concerns over US trade policy have also affected the domestic gold market. “US President Donald Trump” has suggested imposing tariffs on countries he considers to have high trade barriers, including China, India, and Brazil.
“Renisha Chainani, research head at Augmont Gold,” noted that higher gold prices have contributed to weaker jewellery sales, particularly in rural areas, where affordability is a key factor. However, she added that during periods of price increases, investments in gold exchange-traded funds and digital gold often rise as investors seek exposure to gold without buying physical metal.
Impact on the Jewellery Industry
The slowdown in gold sales reflects how economic and policy uncertainties influence demand. Jewellers are monitoring developments in the budget and US trade policy, as changes to import duties or tariffs could have implications for gold pricing and inventory management.
