India's gold demand declined by 6 per cent year-on-year (YoY) to 131.4 tonnes during the second quarter (April-June) of 2026, as record-high prices discouraged jewellery purchases despite continued investor interest in the precious metal, according to the latest report released by the World Gold Council (WGC).
Although the overall volume of gold purchased fell during the quarter, the total value of demand surged by 50 per cent to a record Rs 1.98 lakh crore, reflecting the sharp increase in domestic gold prices. The report noted that soaring prices significantly inflated the value of transactions, offsetting the decline in physical demand and resulting in the highest-ever quarterly value of gold consumption in India.
The WGC attributed the decline primarily to weak jewellery demand, which accounts for the largest share of India's gold consumption. Consumers across the country postponed discretionary purchases as gold prices remained elevated throughout the quarter, making jewellery considerably more expensive. The slowdown was particularly evident in urban markets, where higher prices prompted buyers to delay wedding and festive purchases in anticipation of a possible correction in rates.
According to the report, the financial burden on consumers was further intensified by existing import duties and the 3 per cent Goods and Services Tax (GST), both of which added to the final retail cost of gold. As a result, many households chose to postpone buying jewellery rather than purchase at historically high price levels.
Despite weaker jewellery sales, investment demand for gold bars and coins remained relatively resilient during the quarter. The report said continued economic uncertainty, volatile global financial markets and persistent geopolitical tensions encouraged investors to maintain allocations to gold, which is widely regarded as a safe-haven asset during periods of instability.
The World Gold Council observed that while consumer sentiment towards jewellery weakened because of affordability concerns, investors continued to view gold as an effective hedge against inflation, currency fluctuations and broader market risks. This steady investment demand helped cushion the overall decline in gold consumption.
India's net gold imports also witnessed a significant slowdown during the quarter. Imports declined by 23 per cent year-on-year to 98.1 tonnes, marking the lowest quarterly import level since the pandemic-affected September 2020 quarter. The reduction reflects weaker retail demand as well as higher domestic prices, which discouraged bulk purchases by jewellers and traders.
The report also raised concerns over the unintended consequences of higher import duties. It cautioned that the government's decision to raise the effective import duty on gold to 15 per cent in May has widened the price gap between officially imported gold and unofficial supply channels. According to the council, this differential has contributed to an increase in gold smuggling, as illicit imports become more attractive for those seeking to avoid higher taxes and duties.
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Even so, the WGC remains cautiously optimistic about the outlook for the remainder of the year. It believes demand could recover during the second half of 2026 if gold prices stabilise or moderate from current levels. Consumers who deferred jewellery purchases during the April-June quarter may return to the market once prices become more favourable, particularly ahead of India's festive and wedding seasons, which traditionally account for a substantial share of annual gold consumption.
The report noted that recent market trends already indicate early signs of improvement. As domestic gold prices eased slightly from their record highs in recent weeks, jewellers began reporting a gradual increase in customer enquiries and advance bookings. Seasonal demand has also started to pick up, with retailers receiving higher order volumes in preparation for upcoming festivals and weddings.
The World Gold Council said that while short-term demand remains sensitive to price movements, India's long-standing cultural affinity for gold and its role as both an investment and a store of wealth continue to provide strong underlying support for the market. If prices remain stable and consumer confidence improves, the country could witness a stronger recovery in jewellery demand in the coming quarters, complementing the already resilient investment segment and supporting overall gold consumption.
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