India’s gold demand is expected to decline to a six-year low in 2026 as record-high prices weigh on consumer purchases, particularly jewellery, according to the World Gold Council (WGC). The surge in gold prices has prompted buyers to defer purchases, reduce the quantity of gold bought or shift towards lighter jewellery, putting pressure on overall consumption in one of the world’s largest gold markets.
Jewellery demand fell in the first nine months of the year, which will drag down total demand to around 650 metric tons, the lowest since 2020 when the COVID-19 pandemic forced jewellery shops to close, Sachin Jain, chief executive of the WGC’s Indian operations, told Reuters.
Gold demand fell 29% year-on-year to 162.5 metric tons in the September quarter, as jewellery purchases declined 20% and investment demand dropped 40%, Jain said.
Demand is likely to improve in the December
Demand is likely to improve in the December quarter as key festivals such as Diwali and the wedding season drive purchases, he said.
High prices and weakness in the rural economy following a poor monsoon are likely to cap demand, WGC said in a report. More than half of India’s gold demand comes from rural areas where jewellery is a traditional store of wealth for millions, it added.
Tax hike drives illegal gold imports to highest level:
As per the World Gold Council report, India’s illegal gold imports surged to the highest since 2023 in the third quarter as a government duty hike spurred use of unofficial channels.
Informal shipments for July to September jumped more
Informal shipments for July to September jumped more than 1,500% to 50 metric tons from 3 tons a year earlier, the producer-funded group said, citing data from consultancy Metals Focus. The report gave no details on how the trade is tracked.
Such imports typically go through avenues that avoid official duties, like smuggling or small quantities brought in by individuals. In the past, tax hikes have tended to “increase the incentive” for inflows through such channels, WGC added.
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