Taxation changes, customs duty revisions, and global geopolitical tensions are set to be the primary drivers of bullion prices in the second half of 2026, according to a report released on Thursday, 2 July by the All India Gem & Jewellery Domestic Council (GJC). Prices are expected to remain volatile with possible consolidation following sharp corrections from historic highs recorded earlier in the year.

Historic Peaks and Sharp Corrections in H1 2026

Gold prices surged to a record ₹1,70,480 per 10 grams in January 2026 before retreating to approximately ₹1,42,800 per 10 grams by late June. Silver similarly crossed ₹4,02,490 per kilogram in January, easing to roughly ₹2,25,940 per kilogram by late June. The GJC report noted that these wide swings pushed investors toward safe-haven buying even as jewellery demand softened due to affordability pressures.

The first six months of 2026 were, by the council's assessment, marked by extraordinary peaks followed by corrections that fundamentally reshaped both consumer sentiment and the broader industry outlook.

Customs Duty Hike and GST Burden Weigh on Retail

A customs duty increase announced in May 2026 pushed domestic bullion prices higher and weighed on retail demand, according to the GJC report. The compounding effect of GST compliance requirements continued to challenge dealer margins, prompting renewed industry calls for rationalisation of the tax structure.

The council also reiterated its advocacy for reforms to the Gold Monetisation Scheme (GMS), arguing that unlocking the value of idle household gold could reduce India's import dependency and strengthen domestic supply chains — a structural argument the industry has made for several years without decisive policy response.

Jewellery Demand: Subdued but Festive Season Offers Hope

Jewellery demand is expected to remain subdued in the near term, though the upcoming festive and wedding season in the second half of the year is seen as a potential catalyst for revival, particularly in lightweight jewellery categories. The GJC observed that consumers are increasingly gravitating toward lighter designs, reflecting both budgetary constraints and evolving fashion preferences.

Rajesh Rokde, Chairman of GJC, said: 'Looking ahead, the upcoming festive season and the peak wedding calendar in the second half of the year are expected to provide strong support to jewellery demand, particularly in lightweight categories.' He added that India's deep emotional connection with gold would ensure market resilience despite ongoing volatility.

Global Factors: Dollar Strength and Rate Expectations

Rokde attributed the recent correction in bullion prices to profit-taking, a strengthening US dollar index, and market expectations of prolonged high interest rates globally. He noted that safe-haven demand had also eased as geopolitical tensions that triggered a surge earlier in the year cooled somewhat. Retail prices, however, have remained elevated even as futures markets corrected — a divergence that continues to challenge end consumers.

What to Watch in H2 2026

The industry is closely watching for government clarity on potential tax adjustments and meaningful reforms to the Gold Monetisation Scheme. Geopolitical risks remain a wildcard — any renewed escalation could trigger fresh safe-haven buying and push prices back toward earlier highs. The festive season trajectory and any further customs duty movement will be the two domestic variables most likely to determine how H2 2026 unfolds for the bullion and jewellery trade.