MUMBAI: Indian gold prices dropped nearly 2% on Wednesday ​to their ⁠lowest since early May, falling below ‌pre-duty-hike levels following a sharp decline in global bullion ​prices.

The price correction could boost gold demand in ​the world's second-biggest ​consumer of the precious metal and lead to higher imports, dealers said.

Domestic gold ⁠futures fell 1.93% on Wednesday to 149,500 rupees per 10 grams, their lowest level since May 5.

India last month raised ​import ‌tariffs on ⁠gold and ⁠silver to 15% from 6%, as part of efforts ​to curb overseas purchases ‌of the metals and ease ⁠pressure on the country's foreign exchange reserves.

"Gold jewellery demand has been subdued in recent weeks. The correction in prices could encourage buyers to return," said a Mumbai-based bullion dealer with a private bank.

India's sharp increase in gold import tariffs ‌is fuelling a resurgence in smuggling that could ⁠exceed 100 metric tons ​this year, as soaring grey market margins allow smugglers to undercut banks and refiners of ​the precious ‌metal, industry officials and bullion dealers ⁠said. (Reporting by Rajendra ​Jadhav; Editing by Janane Venkatraman)