Gold loses 21% from January peak, but India's gold prices fall 15%

Indian investors saw a relatively smaller decline in gold prices compared with global investors, despite the sharp correction in the precious metal from its January 2026 record high. The rupee's depreciation against the US dollar and an increase in gold import duty helped limit the fall in domestic prices, according to a report by Axis Mutual Fund.

International gold prices, measured in US dollars, declined 21.4% from their peak recorded on January 30, 2026, as of October 30. In comparison, domestic gold prices fell by 14.9% in rupee terms during the same period, indicating that Indian investors experienced a relatively smaller correction.

The report identified two major factors that supported domestic gold prices. The first factor was the depreciation of the Indian rupee, which weakened from around Rs 89 to Rs 96 against the US dollar. Since India imports a substantial portion of its gold requirements, a weaker domestic currency increases the cost of imported gold, cushioning the impact of falling international prices.

The second factor was the increase in gold import duty from 6% to 15% in March 2026. The higher duty raised the landed cost of imported gold, providing additional support to domestic prices even as international bullion markets witnessed a significant correction.

Explaining the global correction, Axis Mutual Fund attributed the decline largely to profit-booking and the unwinding of leveraged positions. As gold prices retreated from their January peak, stop-loss triggers and margin calls intensified selling pressure, accelerating the downward movement.

Geopolitical and macroeconomic developments, particularly the US-Iran conflict, also contributed to the pressure on gold. Disruptions to oil supplies and growing financial stress across the Gulf region reduced the surplus funds available for investments in the precious metal. This also raised concerns about investors potentially liquidating existing gold holdings to meet financial requirements.

Meanwhile, higher oil prices fuelled inflation concerns and strengthened expectations that central banks, particularly the US Federal Reserve, could keep interest rates elevated for longer. Expectations of tighter monetary conditions pushed up US Treasury yields and supported the dollar, both of which weighed on gold prices.

Despite the correction in international bullion markets, the weaker rupee and higher import duties helped Indian gold prices withstand some of the global selling pressure. Consequently, the decline in domestic gold prices remained considerably lower than the fall in dollar-denominated gold prices over the period.