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Domestic gold prices in India jumped to a record on Friday following an unexpected increase in import duty in the country’s budget, hitting demand and forcing dealers to offer the highest discount in nearly three years.

Dealers in India, the world’s second-biggest gold consumer after China, were offering discounts of up to $30 an ounce — the highest since August 2016 — over official domestic prices, versus the $25 discounts seen last week.

Finance minister Nirmala Sitharaman raised the import duties on gold and other precious metals to 12.5% from 10% in her first gold futures on Friday, a move industry officials said could dampen retail demand and boost smuggling.

“The duty hike surprised everyone,” said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji.

“Prices are so high that even after offering $30 discounts, people are not ready to buy,” Jain said.

Gold futures jumped more than 2% following the budget announcement to hit a record high of ₹35,100 per 10 grams. Local prices have risen more than 11 percent in six weeks.

Jewellers were not buying because they had expected a cut in import duty, a Mumbai-based bank dealer with a private gold importing bank said.

“Now, everyone is confused. Old inventory is available at steep discounts but demand is weak.”

Demand was lackluster in other Asian hubs as well, with benchmark spot gold prices have risen more than 10% so far this year.

In China, premiums dipped to an $11 to $12 an ounce range over the benchmark compared with $12-$14 last week, as demand remained quiet, traders said.

In Singapore and Hong Kong, premiums remained unchanged from last week at 40-60 cents per ounce and 50 cents-$1.20 respectively.

“Gold demand has been slow this week due to high prices but we do see many selling gold instead to take profit,” Brian Lan, managing director at dealer GoldSilver Central in Singapore, said.

A dip of nearly $100 in the benchmark prices could stoke demand for physical gold, traders said.