Bearish for Gold Stocks: Import Duty Hike to Cut India's Gold Demand

India's gold demand is expected to decrease by 50-60 tonnes in 2026, primarily due to a sharp increase in import duties. This projection from the World Gold Council is further influenced by the Prime Minister's call for consumers to temporarily halt gold purchases.

This development is highly significant for the Indian market, as India is one of the largest consumers of gold globally. A substantial drop in demand will directly impact the revenues and profitability of jewelry retailers and gold refiners, potentially leading to inventory write-downs or reduced sales volumes.

Stocks of major jewelry retailers like Titan Company (TITAN), PC Jeweller (PCJEWELLER), and Rajesh Exports (RAJESHEXPO) are likely to face negative pressure. The higher import duties will increase input costs, while reduced demand will squeeze margins and sales. Investment demand, being more sensitive, will be particularly affected.

Traders should monitor the government's stance on import duties and any further statements regarding gold consumption. Watch for quarterly results from jewelry companies for signs of demand contraction and margin pressure. Global gold prices will also play a role, but domestic policy is the primary driver here.

• •India's gold demand predicted to contract by 50-60 tonnes in 2026.
• •Decline follows a sharp increase in import duties.
• •Prime Minister urged consumers to pause gold purchases for a year.
• •Investment demand is more sensitive to duty changes than jewelry.
• •Risk flag: Further policy changes on gold imports