Highlights
- Demand fell 29 per cent year-on-year to 162.5 tonnes in the July-September quarter.
- Jewellery purchases dropped 20 per cent, while investment demand declined 40 per cent.
- The festive and wedding season is expected to support a recovery, with consumers turning to lighter jewellery and exchange offers.
INDIA's gold demand is heading for its lowest annual level in six years, with soaring prices and pressure on household finances discouraging jewellery purchases and investment, the World Gold Council (WGC) said on Tuesday (3).
The world's second-largest gold consumer after China is expected to record demand of between 625 and 675 tonnes in 2026, compared with 875.7 tonnes in 2025, according to the WGC's latest Gold Demand Trends report.
The forecast comes after demand fell 29 per cent year-on-year to 162.5 tonnes in the July-September quarter, against 229.8 tonnes in the corresponding period last year.
Sachin Jain, chief executive of the WGC's Indian operations, told Reuters that jewellery demand had weakened during the first nine months of the year, dragging down overall consumption.
He said demand could improve in the final quarter as Diwali celebrations and the wedding season encourage purchases, although high prices and weakness in rural incomes were likely to limit the recovery.
Prices take a toll on buying
The value of India's gold demand, however, increased by three per cent to around £2.1 billion in the September quarter, compared with approximately £2 billion a year earlier, reflecting the sharp rise in prices.
The average gold price during the quarter stood at $4,262 (around £3,230) per troy ounce, compared with $3,457 (about £2,620) in the same period of 2025.
Jewellery demand fell 20 per cent to 99.9 tonnes from 125 tonnes a year earlier. However, its value rose 16 per cent to approximately £1.3bn.
FILE PHOTO: Indian customers buy gold jewellery at a jewellery shop in New Delhi. (RAVEENDRAN/AFP via Getty Images)
Jain said consumers continued to prioritise gold but were adjusting their purchases to manage affordability.
"Total demand stood at 162.5 tonnes, with its value reaching Rs 2,41,900 crores. This highlights how consumers continue to prioritise gold while adapting their purchases to balance affordability with long-term value," he said.
He said a late-quarter pullback in prices had encouraged some deferred purchases, while wedding and festive buying provided support, particularly in South India.
Investors stay cautious
Consumers were increasingly opting for more considered purchases and exchange programmes to cope with higher prices while retaining their preference for gold jewellery, he added.
Investment demand also weakened, with purchases of bars and coins falling 40 per cent to 55 tonnes from 91.6 tonnes. Gold exchange-traded fund (ETF) demand dropped 50 per cent to 5.3 tonnes from 10.7 tonnes.
More than half of India's gold consumption comes from rural areas, where jewellery is traditionally regarded as a store of wealth.
The 2026 monsoon brought its lowest rainfall in more than a decade, affecting agricultural production and farmers' incomes. Rising living costs following the Iran war have added to the pressure on household spending.
Imports decline sharply
Higher import duties imposed earlier this year have also affected official gold inflows. Net gold imports fell 46 per cent year-on-year to 114.1 tonnes during the quarter, from 211.9 tonnes.
Jain said official bullion imports had declined sharply, while recycling remained muted. Preliminary estimates also pointed to an increase in unofficial gold inflows.
Gold recycling in India fell 12 per cent to 19.2 tonnes during the quarter. The Reserve Bank of India did not purchase any gold during the period, compared with 0.2 tonnes a year earlier.
The global market also showed mixed trends. Worldwide gold demand slipped one per cent to 1,369 tonnes in the third quarter, although its value increased 22 per cent to $188bn (around £142bn).
Global jewellery demand fell 17 per cent to 313 tonnes, while central banks added 321 tonnes to their reserves, a 42 per cent annual increase.
Looking ahead, Jain said the festive and wedding season could provide some support to Indian demand.
(with inputs from agencies)
