Indian gold demand softened in Q2 to 131t, down 6% y/y but spending on gold touched a Q2 record, rising 50% y/y to INR1,979bn (US$21bn).
Jewellery demand recovered sequentially although weakened y/y, growing 14% q/q to 75t but falling 15% y/y; India led global jewellery demand in Q2.
Investment demand moderated after a strong run, easing to 54t from an average of 100t over the preceding three-quarters, but remained above the long-term average of 49t since 2000.
Gold supply fell to a six-year low, mainly due to lower bullion imports, with adequate inventories and recycling providing a buffer.
India's gold demand softened to 131t in Q2, down 6% y/y and 13% q/q, with volumes remaining below the quarter's long-term average of 188t. Yet with prices at elevated levels, spending on gold was at a quarterly record of INR1,979bn (US$21bn), up 50% q/q and 35% y/y, respectively.
Sector trends were mixed: jewellery demand rose q/q but fell y/y, while investment demand increased y/y but eased sequentially. Policy measures, austerity appeal, the mid-May import duty hike and a seasonally inauspicious buying period shaped demand during the quarter.
After an exceptional rally through 2024, 2025 and early 2026, gold prices moderated in Q2 although remained elevated by historical standards. The average LBMA Gold Price PM was down 8% q/q, while the domestic MCX spot gold price was broadly flat, supported by the import duty hike and the rupee depreciation (down by 4% q/q). Even with this quarterly moderation, the international and domestic prices remained substantially higher than a year earlier at 37% and 59%, respectively.
| Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 | q/q % change | y/y % change | H1'25 | H1'26 | y/y % change | ||
| Jewellery | Tonnes | 81.6 | 88.8 | 125.0 | 145.3 | 66.1 | 75.1 | 13.6 | -15.4 | 170.4 | 141.2 | -17.1 |
| INRbn | 680.5 | 842.0 | 1,278.6 | 1,827.6 | 999.2 | 1,132.1 | 13.3 | 34.4 | 1,522.5 | 2,131.3 | 40.0 | |
| US$bn | 7.9 | 9.8 | 14.7 | 20.5 | 10.9 | 12.0 | 9.3 | 21.4 | 17.7 | 22.9 | 29.3 | |
| Bar and Coin | Tonnes | 46.7 | 46.1 | 91.6 | 96.0 | 62.3 | 50.3 | -19.3 | 8.9 | 92.8 | 112.5 | 21.3 |
| INRbn | 389.0 | 437.6 | 937.4 | 1,207.0 | 941.3 | 757.5 | -19.5 | 73.1 | 826.6 | 1,698.8 | 105.5 | |
| US$bn | 4.5 | 5.1 | 10.7 | 13.5 | 10.3 | 8.0 | -22.3 | 56.4 | 9.6 | 18.3 | 90.5 | |
| ETFs | Tonnes | 6.7 | 2.3 | 10.7 | 17.6 | 19.9 | 3.6 | -81.7 | 61.8 | 9.0 | 23.5 | 162.7 |
| INRbn | 55.9 | 21.3 | 109.4 | 221.3 | 300.2 | 54.9 | -81.7 | 157.0 | 77.2 | 355.1 | 359.9 | |
| US$bn | 0.6 | 0.2 | 1.3 | 2.5 | 3.3 | 0.6 | -82.4 | 132.2 | 0.9 | 3.9 | 332.1 | |
| Industrial | Tonnes | 2.5 | 2.0 | 2.5 | 3.0 | 2.3 | 1.9 | -17.7 | -4.4 | 4.4 | 4.2 | -6.2 |
| INRbn | 20.6 | 18.7 | 25.4 | 37.7 | 34.6 | 34.5 | -0.2 | 84.5 | 39.3 | 69.0 | 75.6 | |
| US$bn | 0.2 | 0.2 | 0.3 | 0.4 | 0.4 | 0.4 | -3.7 | 66.7 | 0.5 | 0.7 | 62.6 | |
| Total Demand | Tonnes | 137.4 | 139.1 | 229.8 | 261.9 | 150.6 | 130.9 | -13.1 | -5.9 | 276.5 | 281.5 | 1.8 |
| INRbn | 1,146.0 | 1,319.7 | 2,350.9 | 3,293.6 | 2,275.3 | 1,978.9 | -13.0 | 50.0 | 2,465.6 | 4,254.2 | 72.5 | |
| US$bn | 13.2 | 15.4 | 26.9 | 36.9 | 24.9 | 20.9 | -16.1 | 35.5 | 28.7 | 45.8 | 59.8 | |
| RBI purchase | 3.4 | 0.4 | 0.2 | - | 0.1 | 0.2 | ||||||
| LBMA Gold Price PM | 2,860 | 3,280 | 3,457 | 4,135 | 4,873 | 4,506 | -7.5 | 37.4 | 3,070 | 4,690 | 52.8 | |
| MCX spot gold price | 83,376 | 94,877 | 1,02,289 | 1,25,744 | 1,51,108 | 1,50,733 | -0.2 | 58.9 | 89,127 | 1,50,920 | 69.3 | |
*Data to 30 June 2026 Value based on MCX spot gold price.
Source: Metals Focus, Bloomberg, World Gold Council
Jewellery demand followed an uneven path through Q2. At 75t, it rebounded 14% q/q from a weak Q1 but remained 15% lower y/y — making it the second-lowest Q2 in our quarterly data series going back to 2000. The quarter began strongly, supported by Akshaya Tritiya and wedding-related buying as gold prices eased from their Q1 peaks. Demand weakened from mid-quarter as the month-long inauspicious period (mid-May to mid-June), the 9% import duty hike, and the Prime Minister's appeal to curb gold purchases weighed on demand.
The nearly 60% y/y rise in gold prices continued to constrain affordability, accelerating the shift towards lighter-weight, lower-carat and studded jewellery. Exchange-led purchases gained further traction as a key source of demand support, aided by aggressive promotion of exchange schemes by jewellers. Retailers reported a 10%–20% increase in exchange volumes, with such purchases accounting for up to 70% of sales in some cases.
But lower volumes did not translate into weaker spending: the value of jewellery demand rose 34% y/y and 13% q/q to INR1,132bn/US$12bn (Chart 3), underscoring market resilience and adaptability to the higher-price environment.
Continued store expansion and related stocking kept inventories elevated at around 21t in Q2, well above the 13-year average of 15t.
India was the world's largest gold jewellery market in the quarter, accounting for 27% of global demand (Chart 4). The country has seen a lower y/y decline than other regions, indicative of resilient underlying demand.
Early signs point to an uptick in jewellery demand from late June, supported by lower and relatively stable gold prices. Retailers are reportedly building inventories ahead of the festive season, which begins in late August.
Investment demand — comprising of bars and coins and ETFs — softened to 54t in Q2 from an average 100t over the preceding three quarters but remained modestly above the long-term quarterly average of 49t (Chart 5). The decline was sharper in gold ETFs. Digital gold demand also moderated in April and May before partially recovering in June, with purchases estimated at 4.8t in Q2, down from 6.5t in Q1.
The slowdown coincided with a pause in the gold price rally, following several quarters of sharp gains. This highlights the influence of price momentum on investment behaviour. Rising prices fuelled investment demand through 2025 and Q1'26, while the pullback in prices in Q2 tempered fresh buying. Nevertheless, above average demand points to sustained investment interest.
The demand mix rebalanced in Q2, with investment demand accounting for 48% of total demand, down from nearly 70% in Q1, while net jewellery demand1 accounted for 50%.
Bar and coin demand fell 19% q/q to 50t, as the pace of price appreciation slowed and uncertainty over the near-term price outlook tempered fresh buying. While most regions recorded sequential declines, the pullback was less pronounced in India (Chart 6), which accounted for 16% of global demand during the quarter.
Underlying investor interest remained firm despite a quarterly decline, as highlighted by the 9% increase in demand from a year ago. H1'26 demand reached 113t, the highest in 13 years and well above the 25-year H1 average of 85t.
Gold ETF demand moderated to 4t in Q2, more than 80% below the record 20t in Q1 and the lowest since Q2'25. Despite the decline, India, alongside the UK and Hong Kong, was among the few major markets to record positive demand, while other markets — in particular the US (-44t) and China (-22t) — saw sizeable net outflows.
Flows into Indian gold ETFs were positive in April; May recorded the first monthly net outflow since April 2025, reflecting profit-taking after the 9% import duty hike lifted domestic gold and ETF prices. But the outflows were short-lived: investors returned from early June to buy into the price dips, even as global outflows continued.
Despite the Q2 slowdown, H1'26 ETF demand reached a record 24t, up 163% y/y. Overall, total holdings rose to 119t by end Q2, while AUM increased 163% y/y to INR1.7tn (~US$17.6bn), underscoring sustained investor interest in the segment.
Although the RBI's gold holdings have remained steady at 880t since mid-2025, gold's share of total reserves has risen from 12% to 16%, driven by the 70% rise in gold prices and consequent value increase.
India's gold supply fell to 120t in Q2, its lowest level in six years and well below the 16-year average of 234t (Chart 8). Net bullion imports, which dominate the supply mix, declined to 98t, down 22% y/y and 53% q/q. Imports remained relatively firm in April, supported by Akshaya Tritiya demand, before slowing in May and June as the higher import duty took effect.
Despite the decline, supply remained adequate to meet prevailing demand, supported by elevated industry inventories and the availability of recycled gold.2 In Q2 recycling accounted for 16% of supply; domestic mine production for 2%, and imports for 82%.
Overall, lower supply reflected softer demand and resultant lower import requirements rather than a shortage of gold in the domestic market.
Net recycling (gold sold for cash) remained subdued in Q2, with volumes falling to 19t, down 38% q/q and 17% y/y, the lowest level in eleven quarters. Despite domestic gold prices being around 60% higher y/y, holders showed limited appetite to sell, preferring to monetise their gold holdings rather than liquidate them. This has kept recycled supply muted and points to a bullish price outlook for gold.
Collateralised borrowing against gold jewellery continued to gain traction as a means of monetising household gold holdings. This has fuelled rapid growth in the retail gold loan portfolios of banks and non-bank finance companies (NBFCs): as of end-May, outstanding gold loans stood at INR5.1tn (US$54bn) for banks, up 105% y/y, and INR3.3tn (US$34.5bn) for NBFCs, up 70% y/y. Gold loans are now the second-largest retail lending segment after housing, reflecting their growing appeal to borrowers who seek liquidity while retaining ownership of their gold, and to lenders looking to expand secured credit offerings.
Credit risks remain contained by relatively conservative loan-to-value ratios (LTV): reportedly around 55% for banks and 60% for NBFCs as of March 2026,3 providing a comfortable buffer against fluctuations in collateral values. However, a sustained gold price decline could diminish this buffer and raise the risk of delinquencies; our estimates indicate collateral cover of around 1.5x on incremental gold loans at end-June.
A recent WGC–Kantar survey examined how Indian consumers are responding to changing market conditions. Conducted between 22 May and 3 June 2026, it covered 1,963 consumers aged 18–65 across 12 metro and Tier I cities.
The key findings were:
Indian gold demand is likely to remain sensitive to price movements, with both price stability and dips supporting purchases. Wedding- and festive-related buying should provide seasonal support for the remainder of the year, although elevated prices may continue to constrain jewellery volumes. Investment demand should remain positive, although buying will be influenced by price direction.
There are, however, downside risks. The foremost is a weaker-than-normal monsoon, which could weigh on rural incomes and temper demand. And a further rise in domestic prices or adverse policy measures could weigh on discretionary purchases. Overall, demand is likely to be increasingly selective, driven in the main by wedding and festive jewellery, and further supported by investment.
