Illegal Gold Imports in India Surge After Tax Hikes

Illegal gold imports in India reached their highest level since 2023 during the third quarter of 2026, with informal shipments jumping over 1,500% to 50 metric tons between July and September. The Government of India drove this spike by more than doubling import levies on gold and silver to 15% earlier this year to reduce a trade deficit caused by high energy prices. These tax hikes incentivized smuggling and under-the-counter cash sales to avoid official duties.

While illegal imports rose, official jewelry demand dropped 17% to 313 tons, the lowest third-quarter volume since 2000. This decline was attributed to higher prices and tax changes in both India and China. Some Indian jewelers are currently withholding purchases following a 6.8% price drop in October that pushed gold below $4,000 an ounce.

Globally, central banks provided price support by accumulating a net 321 tons of gold in the third quarter, the fastest buying pace since late 2024. China and Poland were the largest disclosed buyers, adding 63 tons and 41 tons respectively, while Russia was the only major seller, offloading 19 tons. Year-to-date buying reached 675 tons, slightly exceeding the previous year's pace.