Gold Under Siege: Smuggling Set to Top 100 Tons!
India, one of the major powerhouses in the global gold market, has made a decision to hike its gold import tax to 15%. This move by the Indian government is aimed at curbing the current account deficit and alleviating the pressure on the local currency, the rupee. The World Gold Council announced that due to these high taxes, there has been a surge in the smuggling of gold into India. According to the Council's estimate, if this trend continues, the amount of gold illegally brought into the country will exceed 100 tons by the end of 2026.
Illegal gold imports are racing towards a record.
In a radical move made in May, the Indian government decided to reduce import taxes to 15%. When a 3% goods and services tax is added to this rate, the total additional cost burden faced by a consumer buying gold through legal channels reached 18%.
Sachin Jain, the CEO of the World Gold Council in India, emphasized that this price difference has rekindled illicit gold entries. According to Jain, this situation has dealt a blow to the licensed jewelry industry. Official data shows that illegal gold entries increased between May 13 and June 30. The amount of smuggled gold seized was 160.91 kilograms.
Hidden earthquake beneath: Smuggled gold could exceed 100 tons.
The World Gold Council has issued a warning that if illicit gold entries persist, a record could be broken by the end of 2026. The Council indicated that off-the-record trade could exceed 100 tons in 2026.
Investors' pursuit of a safe haven by turning to bullion and gold coins continues to remain strong. However, the steep decline in jewelry demand due to high prices and additional taxes has been enough to pull down the total demand. Globally, all eyes are on how this bottleneck in the world's second largest consumer will reflect on the prices of ounce and gram gold.
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