Sale of gold in Zaveri Bazaar, the largest gold market in the country, has come to a near halt ahead of the budget and US President Donald Trump's expected tariff announcement.

Traders are wary of a possible increase in import duty on gold in the budget to put a leash on the widening trade deficit, said two industry executives. The import duty on gold was brought down to 6% from 15% in the budget for 2024-25 in July last year.

"Buyers in Zaveri Bazaar, both customers and retail jewellers, are in a panic mode whether import duty on gold will be increased, and also whether Trump will put a tariff on gold," said Surendra Mehta, secretary of India Bullion & Jewellers Association, a trade body whose gold and silver rates are used by Reserve Bank of India.

Sales plunged 80% in Zaveri Bazaar in the past four days compared to the previous week. On the contrary, old gold sales have increased this week across the country as gold prices surged and crossed ₹81,000 per 10 gm mark on Thursday. The precious metal touched ₹81,006 per 10 gm when the physical market opened at noon.

"Generally, 0.75 tonne of old gold comes to the market every week which is used for recycling, and new jewellery is also bought by the customers. But this week, 3 tonnes of old gold has already come to the market, according to reports trickling in from different parts of the country," Mehta said.

The tariff threat from the US President has also unnerved the domestic gold market. The US will impose tariffs on countries that "harm" America, Trump said on Monday, naming China, India and Brazil as examples of high-tariff nations.

Renisha Chainani, research head, Augmont Gold, said higher gold prices have led to a decline in jewellery sales, particularly in rural areas, where affordability is a key factor. However, gold exchange-traded funds and digital gold often see higher inflows during such periods as investors seek exposure without physical purchases, she said.

Courtesy: ET