India‘s higher gold import duty has contributed to a sharp increase in informal gold inflows, even as elevated prices weigh on domestic demand. Informal gold imports surged more than 15 times year on year to around 50 tonnes in the third quarter of 2026, compared with just 3 tonnes in the same period last year, according to the World Gold Council, citing Metals Focus data.
The increase followed India‘s decision to raise gold import duty to 15%, more than doubling the earlier rate. The higher duty has widened the price difference between official and unofficial supply channels, increasing the incentive for gold to enter the country through smuggling and individuals carrying smaller quantities.
Higher Import Duty and Elevated Prices Reshape Domestic Demand
The World Gold Council said the available report does not detail how informal gold trade flows were tracked. The higher import duty was introduced as the government sought to curb gold demand and narrow the trade deficit, which had widened amid rising energy prices.
Despite the surge in informal imports, the WGC expects India‘s total gold demand in 2026 to decline to around 650 tonnes, its lowest level since 2020. High prices have affected jewellery purchases as well as investment demand.
India‘s gold demand fell 29% year on year to 162.5 tonnes in the third quarter. Jewellery demand declined 20%, while investment demand dropped 40%. However, the festive and wedding season, including Diwali purchases, could support a recovery in demand during the fourth quarter.
Central Bank Buying Continues to Support Global Gold Demand
Global central bank gold purchases reached 321 tonnes in the third quarter, the fastest quarterly pace since the end of 2024. Year-to-date purchases stood at 675 tonnes, slightly above the same period last year.
China and Poland were the largest reported buyers during the quarter, adding 63 tonnes and 41 tonnes respectively. Russia was the only major seller, reducing its gold holdings by 19 tonnes.
The WGC said central bank demand remains an important source of support for the global gold market. Additional buying may also have been encouraged by recent price weakness.
The divergence between strong central bank purchases and weaker Indian consumer demand highlights the different forces influencing the gold market. While high prices and import duties are affecting domestic jewellery and investment demand, central banks continue to add to their reserves.
Why have informal gold imports into India increased?
The increase followed the rise in India‘s gold import duty to 15%, which widened the price difference between official and unofficial supply channels.
How much informal gold entered India in Q3 2026?
Informal imports rose to around 50 tonnes in the third quarter, compared with 3 tonnes in the same period last year.
What is India‘s gold demand forecast for 2026?
The World Gold Council expects demand to fall to around 650 tonnes, the lowest level since 2020.
How much gold did central banks purchase in Q3 2026?
Global central banks purchased 321 tonnes of gold during the third quarter, the fastest quarterly pace since the end of 2024.
Which countries were the largest reported central bank gold buyers?
China and Poland were the largest reported buyers in Q3, adding 63 tonnes and 41 tonnes respectively.
