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Unprecedented Price Volatility and Market Corrections

The first half of 2026 witnessed extraordinary fluctuations in both gold and silver prices, altering traditional investment and buying patterns:

• Gold Price Matrix: Domestic gold surged to a historic peak of Rs 1,70,480 per 10 grams in January 2026, before undergoing a natural market correction to around Rs 1,42,800 per 10 grams by late June 2026.
• Silver Price Breakthrough: Silver experienced a dramatic, unprecedented rally, crossing the monumental Rs 4 lakh mark to peak at Rs 4,02,490 per kilogram in January 2026. It subsequently eased to the Rs 2,25,940 per kilogram range by late June 2026.

While these record-high figures drove macro investors toward bullion as a reliable safe-haven asset, the severe affordability pressures simultaneously softened retail consumer demand across the country.

Policy Headwinds and the Push for Structural Reforms

Domestic retail operations faced compounded complexities due to recent fiscal policy changes. The customs duty hike announced in May 2026 immediately inflated domestic prices, directly impacting retail sales margins already strained by heavy compliance mandates and the existing GST burden.

In response, the GJC is actively advocating for long-term policy stabilization, placing an analytical focus on the underutilized Gold Monetization Scheme. The Council notes that a robust overhaul of this scheme is essential to unlock the vast reserves of idle household gold, reduce India’s heavy national import dependency, and fortify the domestic supply chain.

Global Catalysts and Macroeconomic Drivers

The bullion market’s volatile trajectory throughout 2026 remains tethered to a combination of international geopolitical and economic factors:

• Geopolitical Flares: Active conflicts in the Middle East and broader global instability consistently fueled early volatility and safe-haven buying.
• Currency Pressures: The steady depreciation of the Indian rupee against the US dollar added structural upward pressure on domestic retail pricing.
• Institutional Demand: Persistent global inflationary trends and aggressive diversification by central banks into gold reserves strongly reinforced the metal’s baseline appeal.

Leadership Insights: Market Resilience & Consumer Adaptation

“The correction in bullion prices during late June reflects a natural adjustment after extraordinary highs. Gold futures settled around Rs 1,42,800 per 10 grams, while silver eased to the Rs 2,25,990 per kg range after crossing Rs 4,00,000 earlier this year. These shifts are driven by profit-taking, a stronger US dollar index, and expectations of prolonged high interest rates globally. Global sentiment has also shifted as safe-haven demand eased after recent geopolitical panic cooled. While futures saw a meaningful drop, retail prices have remained elevated, with 24K gold continuing to trade around Rs 14,250–Rs 14,400 per gram through late June this year. This shows the market is adjusting rather than collapsing. 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. These cultural drivers, combined with India’s deep emotional connect with gold, will ensure that despite volatility, the market remains resilient.” — Rajesh Rokde, Chairman, GJC

“Gold remains an integral part of Indian households, but affordability pressures are real. The next six months will depend heavily on geopolitical stability and government policy, particularly in the context of customs duty and taxation. Excessive duties risk encouraging unofficial channels, which hurts consumers and weakens the trade. We urge policymakers to balance revenue needs with industry sustainability, ensuring that reforms strengthen rather than strain the sector. At the same time, the Gold Monetisation Scheme offers a long-term solution by mobilising idle household gold, reducing import dependency, and reinforcing India’s economic resilience. Consumers are adapting with lightweight jewellery designs, while investors continue to view gold as a safe-haven. The industry stands ready to collaborate with the government so that national interest, consumer welfare, and market stability move forward together.” — Avinash Gupta, Vice Chairman, GJC

H2 2026 Outlook: Consolidation and Seasonal Hopes

Heading into the latter half of 2026, the GJC projects that bullion prices will maintain a volatile posture, likely undergoing a period of consolidation following late June’s downward corrections. While overall consumer jewellery demand may initially remain subdued due to persistent pricing realities, the peak cultural wedding calendar and festive buying are expected to spark a vital sales revival. This demand will likely center on contemporary, lightweight jewellery lines designed to accommodate consumer budgets. Moving forward, the trade remains highly focused on awaiting formal clarity regarding potential tax adjustments and government reforms to the Gold Monetization Scheme.

About GJC

The All India Gem & Jewellery Domestic Council (GJC) is a national trade council established with the objective of addressing the interests, growth, and development of the Indian gems and jewellery industry through a comprehensive and inclusive approach. As a self-regulated apex industry body, GJC has, for over two decades, served as a bridge between the Government and the trade while undertaking various initiatives for the advancement, formalization, and protection of the industry.

FAQ’s

1. What are the key findings of the GJC’s 2026 half-year market review?
The GJC reported that India’s gem and jewellery industry experienced significant price volatility during the first half of 2026, driven by record-high bullion prices, market corrections, customs duty changes, and global economic uncertainty. It believes policy reforms will be crucial to sustaining demand in the second half of the year.

2. Why is GJC calling for GST and Gold Monetisation Scheme reforms?
The Council argues that rationalising GST and strengthening the Gold Monetisation Scheme would reduce pressure on consumers, mobilise idle household gold, lower India’s dependence on imports, improve domestic supply, and support long-term growth of the jewellery industry.

3. What factors influenced gold and silver prices during the first half of 2026?
According to GJC, bullion prices were influenced by geopolitical tensions, a weaker Indian rupee, persistent global inflation, central bank gold purchases, higher customs duties, and expectations of prolonged high interest rates, leading to both record highs and subsequent market corrections.

4. What is GJC’s outlook for the jewellery industry in the second half of 2026?
GJC expects bullion prices to remain volatile but believes the festive season and India’s wedding calendar will revive jewellery demand. Consumer interest is likely to focus on lightweight and contemporary jewellery, while the industry awaits further government policy announcements.

5. What is the role of the All India Gem & Jewellery Domestic Council (GJC)?
The All India Gem & Jewellery Domestic Council (GJC) is India’s apex trade body representing the domestic gems and jewellery industry. It works closely with the government and industry stakeholders to promote trade, advocate policy reforms, improve compliance, strengthen consumer confidence, and support the sector’s sustainable growth.

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What is the Gold Monetization Scheme?

The Gold Monetization Scheme (GMS) was launched by the Government of India in 2015 with the aim of bringing idle gold lying in households and institutions into the formal banking system.

GMS is designed to mobilize the estimated 34,000 tonnes of gold held by Indian households. Under this scheme, individuals can deposit their gold in banks and earn interest on it, creating a regular source of income without selling the gold. The scheme allows people to deposit old jewellery, broken ornaments, gold coins, biscuits, or gold bars available with them.

Key Components:

• Gold Deposit Scheme: For households and institutions looking to earn interest.
• Gold Metal Loan: Facilitates the lending of this mobilized gold to jewellers, reducing the need for fresh imports.

How Can You Turn Your Jewelry into Regular Income?

• Purity Testing: Take your gold to a BIS-certified Collection and Purity Testing Centre (CPTC).
• Melting and Certification: The gold is melted to verify purity. You receive a certificate representing the equivalent of 995 fineness gold.

Deposit Tiers:

• Short-Term (1-3 years)
• Medium-Term (5-7 years)
• Long-Term (12-15 years)

Interest rates are set by the government in consultation with the RBI.

• Earnings: The interest is credited to your account periodically, providing a regular income without you having to sell your principal gold holdings.

Why the Sudden Push for Gold Monetization?

The urgency stems from a precarious economic balance. India’s gold imports surged by 24% in FY26, costing the nation approximately 72 billion dollar in foreign exchange. Amidst the fallout of the Iran-US conflict, the Prime Minister’s call to “postpone discretionary spending” aims to protect the economy.

The Industry’s Plea: Revive and Strengthen

Despite its potential, the scheme previously attracted only a tiny fraction (about 39 tonnes) of India’s total gold. With the current economic climate, jewelry bodies are requesting the government to:

• Increase Interest Rates: To make it more attractive than traditional gold bonds.
• Simplify Compliance: Reducing the paperwork for small-scale household depositors.
• Tax Incentives: Ensuring that the interest earned remains a lucrative “tax-free” or “low-tax” income source.

The Bottom Line

As India navigates a tough year for foreign trade, your “dead investment” in lockers could be the key to national economic resilience. By opting for the Gold Monetization Scheme, you not only contribute to reducing the nation’s import bill but also turn your family heirlooms into a smart, income-generating financial tool.

FAQ’s

1. What is the Gold Monetization Scheme (GMS)?
The Gold Monetization Scheme is a government initiative launched in 2015 that allows individuals and institutions to deposit idle gold with banks and earn interest on it instead of keeping it locked at home.

2. What types of gold can be deposited under the scheme?
People can deposit old jewellery, broken ornaments, gold coins, biscuits, and gold bars under the scheme after purity testing at BIS-certified centers.

3. How does the Gold Monetization Scheme help the Indian economy?
The scheme helps reduce India’s dependence on imported gold, lowers foreign exchange outflows, supports forex reserves, and decreases pressure on the Current Account Deficit (CAD).

4. How do investors earn income through the scheme?
Depositors earn periodic interest on the gold deposited with banks. The gold is first tested for purity, converted into certified gold value, and then placed under short-, medium-, or long-term deposit plans.

5. Why is the government promoting the scheme again in 2026?
The renewed focus comes amid rising gold imports, pressure on India’s foreign exchange reserves, and efforts to encourage productive investment instead of physical gold hoarding during global economic uncertainty.

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By integrating local jewellers into a regulated, tech-driven framework, the council aims to help the government unlock billions in “idle” gold, reducing import dependency and strengthening the nation’s macroeconomic stability.

A Digital Leap for Physical Assets

The core of the GJC’s proposal is a formal transition toward a digital gold ecosystem. This framework, developed in consultation with the Reserve Bank of India (RBI) and the Ministry of Finance, seeks to solve the structural inefficiencies that have hindered the adoption of previous schemes.

• Dematerialisation: Physical gold (bullion, coins, and jewellery) would be converted into digital balances held within the banking system.
• Jeweller Integration: The model leverages the trust and reach of local jewellers to act as key facilitators in the formal financial system.
• Interest-Bearing Wealth: Traditionally non-yielding gold assets are transformed into interest-earning financial instruments without the owner needing to liquidate their holdings.

Transparency and Accountability

To address consumer and regulatory concerns, the GJC has anchored the revised framework on three pillars of governance:

• Full Transparency: End-to-end digital recording of every stage, from deposit and assaying to the final credit.
• Traceability: System-based tracking across the entire value chain, supported by verifiable audit trails.
• Accountability: Clear responsibilities for banks, refiners, and jewellers, backed by strict KYC compliance and regulatory oversight.

Economic Impact: Reducing the Import Burden

The GJC believes this revamped scheme is critical for India’s broader economic health.

• Market Formalisation: Shifting toward a regulated digital framework will improve compliance standards and market efficiency.
• Current Account Deficit (CAD): By mobilising domestic idle gold, the government can significantly reduce its reliance on expensive gold imports, which are a major drain on foreign exchange.
• Leveraging Investment Trends: With the recent surge in gold bullion and coin investments, the GJC sees a massive opportunity to bring these private holdings into the formal economy

Leadership Insight

“The proposed model integrates jewellers into a regulated, digital ecosystem, significantly enhancing transparency and trust for consumers. By unlocking the value of idle gold, we can strengthen domestic supply and reduce reliance on imports.” — Mr. Rajesh Rokde, Chairman of GJC

“The revamped GMS is designed to be practical and scalable. It creates a secure pathway for investors to earn returns on idle gold, transforming it into a productive financial instrument.” — Mr. Avinash Gupta, Vice Chairman of GJC

FAQ’s

1. What is the main proposal by GJC?
GJC has proposed a digital transformation of the Gold Monetisation Scheme, where physical gold like jewellery and coins can be converted into digital assets within the banking system, making it easier to manage, track, and earn returns on gold holdings.

2. How will the digital gold system work?
Under the proposed model, deposited gold will be converted into digital balances after proper valuation and verification. These balances will be maintained in bank accounts, ensuring transparency, traceability, and ease of transactions for investors.

3. What role will jewellers play in the new system?
Local jewellers will act as key facilitators, helping customers deposit gold, verify purity, and integrate them into the formal financial system, leveraging their existing trust and reach among consumers.

4. How does this benefit the Indian economy?
The scheme can reduce dependence on gold imports by mobilising idle domestic gold, improve market transparency, and help lower the current account deficit while strengthening overall economic stability.

5. Can investors earn returns under this scheme?
Yes, the revamped model allows investors to earn interest on their deposited gold, transforming traditionally non-yielding assets into income-generating financial instruments without selling their gold.

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