Business Original explainer
India is the world's second-biggest gold buyer. What drives the price of the metal in every Indian home?
Walk into any Indian home and you will probably find gold: a mother's bangles, a bride's necklace, a small coin kept for a daughter's wedding. India is the second-largest consumer of gold in the world, after China. In 2024, Indians bought 802.8 tonnes of it, about 26 per cent of world consumption. Yet India mines almost no gold of its own. Nearly all of it is imported, which makes the price of gold a story about the world economy, the rupee, and government policy, as much as about weddings.
The reasons are old and practical. For centuries, gold has been the savings account of households that distrusted banks or had no access to them. It is portable, divisible, easy to sell, and accepted everywhere. Weddings and festivals drive much of the demand: gold is gifted at marriages, bought on Dhanteras and Akshaya Tritiya, and passed down as family wealth. In rural India, where banking reaches fewer people, a gold bangle is often a family's emergency fund.
Gold also holds a cultural place no other asset has. It marks status, blesses a marriage and carries emotion. Indian demand stays strong even when prices rise, because much of it is jewellery first and a store of value second, which is why high prices dent the weight bought but rarely destroy demand.
Gold's price in India is not set in India. It starts with the international price, quoted in dollars per troy ounce in London, the world's main bullion market. That price is converted into rupees, and then Indian taxes and costs are added on top: import duty, 3 per cent goods and services tax, and the jeweller's making charges, which typically run from about 8 to 25 per cent on ornaments.
Because of this chain, the Indian price moves for three separate reasons. If the world price rises, Indian gold gets dearer. If the rupee weakens against the dollar, gold gets dearer even when the world price is flat. And if the government raises import duty, gold gets dearer overnight. That is why the price on a jeweller's board can jump even when nothing has changed in the world market.
Prices are quoted per 10 grams, the traditional Indian unit, for 24-carat gold, which is 99.9 per cent pure, and for 22-carat gold, which is 91.6 per cent pure and is the usual standard for jewellery because pure gold is too soft to hold its shape. In mid-November 2026, 24-carat gold was trading at roughly 1.37 lakh rupees per 10 grams on the benchmark rates published by the India Bullion and Jewellers Association, before GST and making charges. Retail rates vary by city and by jeweller, and they change through the day.
Import duty is the most Indian part of the gold price, and its recent history shows how policy moves markets. For years, India charged 15 per cent duty on gold imports. In the July 2024 Budget, the government cut it sharply to 6 per cent, made up of 5 per cent basic customs duty and 1 per cent agriculture infrastructure cess. The World Gold Council called it the sharpest cut on record, and the effect on smuggling was dramatic: Reuters reported that illegal gold imports fell from about 156 tonnes in 2023 to about 69 tonnes in 2024 and about 20 tonnes in 2025.
Then, in May 2026, the duty was raised back to 15 per cent, with basic customs duty doubled to 10 per cent and the cess raised to 5 per cent. Dealers told Reuters they expected smuggling to rise again, possibly above 100 tonnes in 2026. The lesson is neat: lower duty, and more gold comes through official channels; raise it, and the grey market returns.
India's gold demand in 2024 was 802.8 tonnes, up from 761 tonnes in 2023, helped by the duty cut and festival buying. But high prices changed the pattern in 2025. Jewellery demand by weight fell 24 per cent to about 430 tonnes, even as its value hit a record of about 49 billion dollars, because each gram cost so much more. Investment demand moved the other way, with Indians buying far more bars, coins and gold exchange-traded funds.
The Reserve Bank of India is also a buyer. Its gold reserves rose to about 880 tonnes in 2025, as central banks around the world added gold to diversify away from the dollar. And India imports about 86 per cent of its gold supply, which is why the metal is one of the largest items in the import bill, and why its price matters to the trade deficit and the rupee.
Jewellery remains the most common form, but it is also the costliest way to own gold, because making charges and GST are lost when you sell. Gold coins and bars avoid making charges. Sovereign Gold Bonds, issued by the Reserve Bank, pay interest and track the gold price, and their gains are tax-free if held to maturity. Gold exchange-traded funds let people buy gold in tiny amounts through a demat account, and digital gold apps sell gold by the gram. Each form has different costs, risks and tax rules.
Check for hallmarking: the Bureau of Indian Standards mark stamped on jewellery certifies its purity, and buyers should ask for it and keep the bill.
Gold will keep its place in Indian life. Prices will rise and fall with the dollar, the rupee and government policy, and demand will bend but rarely break. Knowing the chain from London to the local jeweller is the best defence against overpaying: check the day's rate, and ask how much is duty, GST and making charge, because the price on the board is only the beginning of the bill.
This article explains how gold pricing works. It is not investment advice.
This explainer was written by The Daily Short's desk from the sources listed above. It is general information, not professional advice. Spot an error? See our Corrections Policy or tell us via the Contact page and we will correct it. Follow our official Instagram @thedaily.short.