Winning Bizness Desk
Mumbai.India's gold demand declined 6% year-on-year during the April-June quarter, reflecting the combined impact of higher import duty and Prime Minister Narendra Modi's appeal to curb non-essential gold purchases. According to the World Gold Council (WGC), total demand stood at 131.4 tonnes in the second quarter of 2026, compared with 139.7 tonnes in the corresponding period last year. The decline in volumes came despite a sharp rise in gold prices, although consumers continued to spend significantly more in value terms.
Market reacts to policy measures
The slowdown follows the Centre's decision in May to raise the import duty on gold and silver from 6% to 15%, making both precious metals substantially more expensive for buyers. Around the same time, Prime Minister Modi urged citizens to avoid unnecessary gold purchases to help conserve the country's foreign exchange reserves.
The two developments together influenced consumer sentiment and slowed fresh buying across the domestic market.
Value of purchases hits record
Despite lower physical demand, the value of gold purchased during the quarter reached a record high because of soaring prices.
Key figures from the WGC report include:
- Gold consumption by value rose to Rs 1,98,100 crore.
- This was 50% higher than Rs 1,32,500 crore recorded in the April-June quarter of 2025.
- WGC India Regional CEO Sachin Jain said the quarter set a record in value terms despite weaker volumes.
- The trend suggests consumers continue to view gold as an important store of wealth even at elevated prices.
Jewellery demand sees sharp decline
Jewellery demand recorded the steepest fall during the quarter. Consumption dropped 15% to 75.1 tonnes from 88.8 tonnes in the same period last year, indicating that higher prices and government measures weighed more heavily on discretionary purchases.
Prime Minister Modi's appeal to reduce non-essential buying also appears to have influenced retail sentiment, particularly in the jewellery segment, where consumers often postpone purchases when prices remain high. However, the WGC believes the decline reflects short-term caution rather than a structural shift in consumer preference.
Prices surge, demand outlook remains positive
Gold prices climbed sharply during the quarter. The average international price rose to $4,506.3 per ounce, compared with $3,280.4 per ounce in the corresponding quarter of 2025. In India, the average quarterly price, excluding import duty and GST, increased to Rs 1,50,744.8, up from Rs 94,875.9 a year earlier.
The WGC expects India's total gold demand in 2026 to remain between 650 and 750 tonnes. According to Sachin Jain:
- Demand is likely to strengthen during the festive season.
- Wedding-related purchases are expected to support consumption.
- Consumer interest in gold remains resilient despite record prices.
Global demand stays largely unchanged
The WGC said global gold demand remained broadly stable during the April-June quarter, underlining that the weakness was largely specific to the Indian market. Worldwide demand stood at 1,269 tonnes, almost unchanged from 1,268.6 tonnes recorded in the same quarter of 2025.
The report suggests that while policy measures and higher prices temporarily moderated buying in India, gold continues to enjoy strong long-term appeal. With festivals and the wedding season approaching, the industry expects demand to recover in the coming months, even if consumers remain selective in their purchases.
