According to the WGC report, in May 2026, global gold became 1.4% cheaper, but in India, it became 4.1% more expensive.
This question is on everyone's mind: when gold is getting cheaper in the world, why are its prices rising in the Indian market? There is not just one, but several major reasons behind this that are directly affecting domestic prices.
These reasons include government policies, the movement of the rupee, and international conditions. Let's understand these reasons in detail.
The biggest reason for the surge in gold prices in India is the massive increase in import duty. The government has recently more than doubled the import duty on gold.
This duty has been increased directly from 6 percent to 15 percent. This new rate came into effect on May 13, 2026, which made imported gold more expensive for jewelers, and its impact was directly passed on to customers.
The second important factor affecting gold prices is the weakness of the rupee against the dollar. Gold is traded in dollars in the international market.
When the rupee weakens, we have to spend more rupees to buy the same amount of gold. Therefore, even if global prices are low, a weak rupee increases prices in the domestic market.
Despite the price increase, gold continues to be an attractive option for investors. The WGC report shows that so far in 2026, gold has given Indian investors a spectacular return of about 17.6%.
This is why it is still considered a safe investment today.
Rising geopolitical tension in the Middle East has also supported gold prices. Whenever there is an environment of uncertainty in the world, investors turn to gold as a safe investment, which increases its demand.
India is one of the largest consumers of gold in the world, so the effect of global demand is also visible here.
Meanwhile, Prime Minister Narendra Modi had made a special appeal to the citizens regarding the purchase of gold.
He had said that a large part of India's foreign exchange is spent on gold imports, so people should avoid buying gold for a year.
The effect of this appeal was also seen in the market. According to the report, there has been some softening in the physical demand for gold in India, and gold was also sold at a discount in the market.
However, buying by central banks, especially India and China, is expected to support gold prices for a long time. But if oil prices rise, the dollar could strengthen, which could put pressure on gold.
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