Gold Prices May Face Fresh Pressure in September as High Rates, Weak Demand Weigh on Buying

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Srinagar, Sep 05: Gold prices could come under fresh pressure in September as high prices, cautious consumers and a possible slowdown in fresh purchases weigh on demand, even as the outlook for the precious metal remains closely tied to global market movements.

The prospect of weaker buying comes after Prime Minister Narendra Modi appealed to people on September 1 to avoid purchasing gold unless necessary, as part of a broader call to reduce avoidable foreign-exchange outflows and encourage greater domestic consumption.

Industry estimates suggest India’s gold imports could decline in September after the country imported nearly 45 tonnes in August. The expected slowdown comes amid exceptionally high gold prices, which have already begun influencing buying decisions among consumers.

Gold prices fell nearly 1.8% on September 1 and briefly slipped below ₹1.5 lakh per 10 grams on the Multi Commodity Exchange before recovering some ground. The recent volatility has been linked to changing expectations around US Federal Reserve interest rates, movements in the US dollar and bond yields, as well as geopolitical tensions and oil prices.

A sustained slowdown in Indian buying could add further pressure to domestic gold prices. However, analysts caution that weaker imports or jewellery demand alone would not necessarily trigger a sharp crash, as gold prices are also driven by international bullion rates, the rupee-dollar exchange rate, central-bank purchases, US monetary policy and global geopolitical developments.

India’s gold market is also seeing a growing shift towards old-gold exchanges. Jewellers expect consumers to increasingly exchange existing jewellery for new pieces rather than make entirely fresh purchases. Old-gold exchanges currently account for around 45-50% of jewellers’ business and could rise to 60-70% during the upcoming festive season, according to industry estimates.

The trend could allow consumers to continue buying jewellery while reducing the need for fresh imported gold. India is estimated to hold around 31,000 tonnes of gold in households, making recycled and exchanged gold an increasingly important part of the domestic market.

The government has also taken steps to discourage gold imports. In May, the effective import duty on gold and silver was raised from 6% to 15%, comprising a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess. The move was aimed at reducing precious-metal imports and limiting foreign-exchange outflows.

Gold imports had nevertheless risen sharply earlier in the year. Gold-bar imports increased 47.1% year-on-year to $11.01 billion during April-June 2026, compared with $7.49 billion in the same period a year earlier, with imports from the UAE recording particularly strong growth.

For consumers, the key question in September is whether the recent surge in gold prices can continue if buying begins to slow. While a major plunge cannot be ruled out, the direction of prices will ultimately depend on a combination of Indian demand and wider international factors.

For now, September could prove to be an important month for the gold market, with consumers increasingly weighing whether to buy at record-high levels or wait for prices to fall.