India’s gold demand to fall in 2026 as jewellery slump offsets investment buying

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Last Updated: 29th January 2026 - 03:10 pm

Summary:

India’s gold demand is expected to decline in 2026 as higher prices continue to weigh on jewellery consumption, offsetting an increase in investment buying. Total demand is projected to range between 600 and 700 metric tonnes, lower than last year’s levels, as domestic prices remain elevated despite relatively modest gains in equity markets.

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India’s gold demand is expected to fall in 2026 after declining 11% in the previous year, according to data released by the World Gold Council on Thursday. The moderation is attributed to weaker jewellery demand amid elevated prices, even as investment demand remains firm.

Total gold demand is projected to range between 600 metric tonnes and 700 metric tonnes in 2026, compared with 710.9 tonnes in the previous year, which marked the lowest level in five years.

Impact of rising prices

Domestic gold prices surged 76.5% in 2025, significantly outpacing gains in domestic equity markets. During the same period, India’s benchmark Nifty 50 index rose 10.5%.

The sharp rise in gold prices has constrained jewellery purchases, as price volatility has reduced affordability for consumers, weighing on overall consumption.

Jewellery and investment demand trends

Jewellery demand fell 24% in 2025 to 430.5 metric tonnes, marking its lowest level in nearly three decades, excluding 2020 when consumption was affected by the Covid-19 pandemic.

In contrast, investment demand increased 17% to 280.4 tonnes in 2025, the highest level since 2013. Investment demand accounted for around 40% of India’s total gold consumption during the year, compared with a long-term average of roughly 25%.

ETF inflows and scrap supply

Inflows into gold exchange-traded funds rose sharply in 2025, increasing 283% year-on-year to a record ₹42,960 crore, equivalent to $4.67 billion.

Higher prices typically encourage the sale of old jewellery and coins, contributing to scrap supply. However, scrap supply declined 19% in 2025 to 92.7 tonnes, as expectations of further price increases persisted despite bullion prices hitting repeated record highs.

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