Gold is back in focus in India after the , triggering a sharp rally in domestic prices and pushing many investors to reconsider how they buy the yellow metal.
With physical becoming significantly more expensive after the duty hike, market experts say gold exchange-traded funds (ETFs) are increasingly emerging as a preferred option for retail investors looking for exposure without the additional costs associated with jewellery and bullion purchases.
Gold rates on the Multi Commodity Exchange (MCX) surged sharply and were trading around Rs 1.62 lakh per 10 grams around 10:30 am. Gold prices have gained sharply after the government raised import duties to 15%.
The revised structure now includes a 10% Basic Customs Duty and a 5% Agriculture Infrastructure and Development Cess (AIDC), significantly increasing the landed cost of imported gold.
The sharp rise in physical gold prices is now pushing many retail investors towards gold ETFs much earlier than expected.
Unlike physical gold, ETFs do not involve making charges, storage concerns or direct exposure to higher import-related retail premiums.
Dr Renisha Chainani, Head of Research at Augmont, said the latest duty hike has made ETFs structurally more attractive for investors looking to increase gold exposure.
“Physical gold is now 15% costlier at import, while ETFs carry zero import duty burden — making them structurally superior for new-money allocation,” she said.
According to Chainani, commodity ETF turnover in FY26 has already surged sharply and is now exceeding equity ETF turnover, reflecting growing investor interest in commodity-linked products.
She added that SIP-style investing through gold ETFs may become increasingly popular among retail investors because it allows gradual accumulation without the costs associated with physical gold ownership.
Analysts say the shift towards ETFs is also being driven by changing investor behaviour, especially among younger investors who increasingly prefer digital, liquid and lower-cost investment products over traditional jewellery purchases.
The biggest trigger is the customs duty hike itself. India imports most of its gold requirements, meaning any increase in import taxes directly raises domestic prices.
Experts estimate that the 9-percentage-point increase in import duty could structurally add around Rs 12,000–14,000 per 10 grams to local gold prices over time.
A weakening rupee is adding to the pressure. The , making imported gold even more expensive for domestic buyers.
At the same time, geopolitical tensions linked to the ongoing West Asia crisis continue to support safe-haven demand globally, even as markets remain volatile.
The government’s recent focus on reducing non-essential imports and conserving foreign exchange reserves has also put gold imports under sharper scrutiny.
Prime Minister Narendra Modi’s recent appeal asking citizens to has further intensified discussion around the role of gold in India’s import bill and external-sector pressures.
Analysts say the move marks a major structural shift for India’s bullion market. Dr Ravi Singh, Chief Research Officer at Master Capital Services Limited, said the rally reflects a combination of policy changes, rupee weakness and rising geopolitical uncertainty.
“The domestic duty-led rally is operating alongside complex global cues,” Singh said.
He noted that while stronger-than-expected US inflation data has pressured international gold prices, the sharp increase in India’s import duties has created a separate domestic price shock that continues to support MCX Gold.
According to Singh, the market remains structurally bullish.
“Crucial support levels have shifted significantly higher to 159,000 and 156,000, while immediate overhead resistance is pegged at 165,000,” he said.
“As long as prices sustain above these reinforced floors, the upward momentum is expected to persist,” Singh added.
Analysts say investors need to distinguish between short-term price spikes and long-term allocation decisions.
Gold is currently benefiting from multiple triggers at the same time, including import duty changes, rupee weakness, geopolitical tensions, inflation concerns and safe-haven buying.
That combination has created a sharp divergence between domestic and international gold prices.
However, experts caution against aggressively chasing the rally immediately after such a sharp spike.
Instead, many analysts believe staggered allocation through SIP-based ETF investing may be a more balanced strategy for long-term investors looking for portfolio diversification and inflation protection.
The broader outlook for gold may now depend heavily on crude oil prices, the trajectory of the rupee, geopolitical developments in West Asia and whether global central banks begin cutting interest rates later this year.
For now, one thing is clear: the government’s import duty move has changed the economics of gold investing in India, and retail investors are rapidly reassessing how they want exposure to the yellow metal.