Gold Demand Crashes 70% After Duty Hike: Is Real Estate Becoming India’s New Favourite Investment?

Gold sales have plunged sharply following the Centre’s steep import duty hike and soaring prices, while many Indian families are increasingly turning towards real estate as their preferred investment option.

India’s love with gold appears to be facing a major test. A combination of record-high gold prices, a sharp increase in import duty and changing investment preferences has led to a significant decline in demand for the precious metal over the past few weeks.

According to industry estimates, gold demand fell by nearly 70 per cent in the fortnight ending May 27 compared to the same period last year. The slowdown comes after the Centre increased the import duty on gold from 6 per cent to 15 per cent on May 13, making purchases significantly more expensive for consumers.

Industry experts say the impact has been immediate. Gold demand reportedly declined to just 7.5 tonnes during the fortnight, compared to around 25 tonnes in the corresponding period last year. The sharp drop has affected jewellery retailers and bullion traders across the country, particularly those operating in the unorganised sector.

Despite weaker demand, gold prices remain near record highs. In the Mumbai spot market, 999 purity gold was recently trading at around Rs 1.57 lakh per 10 grams, excluding GST, keeping the precious metal well above the Rs 1.50 lakh mark.

India remains one of the world’s largest consumers of gold, with annual consumption typically ranging between 800 and 850 tonnes. However, rising prices have prompted many households to rethink their traditional savings strategy.

For generations, Indian families have considered gold a reliable store of wealth and a safeguard during financial uncertainty. But as prices continue to climb, many investors are now looking at alternatives that offer both utility and long-term value appreciation.

A growing number of families are reportedly directing their savings towards real estate investments, viewing property as both an asset and a practical necessity. Unlike gold, a house can provide accommodation, generate rental income and potentially appreciate in value over time.

The shift is becoming increasingly visible in major cities, where rising rental costs have encouraged many homebuyers to consider purchasing property instead of continuing as tenants. For several families, money previously earmarked for gold purchases is now being used for home down payments and housing loan EMIs.

Recent homebuyer sentiment surveys also indicate a changing mindset among investors. A majority of respondents now view real estate as the most preferred long-term investment avenue, while interest in traditional gold investments has weakened compared to previous years.

Experts believe the trend reflects changing financial priorities rather than a complete loss of faith in gold. While the precious metal continues to hold cultural and emotional significance, many households are increasingly seeking investments that combine wealth creation with practical benefits.

With gold prices remaining elevated and duties significantly higher than before, market observers say consumer behaviour over the coming months will determine whether the current slowdown is temporary or the beginning of a broader shift in India’s investment landscape.

Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. Readers should consult qualified financial professionals before making investment decisions.