India's Q2 2026 Gold Demand Declines, But Spending Soars to Record ₹1.98 Lakh Crore

India's gold demand stood at 131 tonnes during the April-June quarter of 2026, down 6% from the same period last year, the World Gold Council (WGC) noted in its latest quarterly report, as per The Moneycontrol news report.  

The fall in volumes came as domestic gold prices stayed at elevated levels through the quarter. Even with lower buying, the total value of gold demand rose 50% year-on-year to a record ₹1.98 lakh crore (around $21 billion). 

Domestic gold prices remained nearly 59% higher than a year ago. International prices eased during the quarter, but the depreciation of the rupee and the increase in import duty in May 2026 kept local prices elevated. 

Jewellery Purchases Shift Towards Lower Ticket Sizes 

Jewellery demand totalled 75 tonnes, up 14% from the January-March quarter due to seasonal purchases around Akshaya Tritiya and weddings. Compared with a year earlier, however, demand declined 15%, making it one of the weakest second-quarter performances since 2000. 

Higher prices changed the mix of purchases. Retailers reported better demand for lightweight ornaments, lower-carat jewellery and studded products. Exchange transactions also increased during the quarter, with overall exchange volumes rising by 10-20%.  

Some jewellers reported that exchanged jewellery formed a significant share of total sales. Despite lower volumes, jewellery spending rose 34% to ₹1.13 lakh crore. 

Investment Buying Loses Pace 

Investment demand, covering bars, coins and gold exchange-traded funds (ETFs), moderated after three consecutive strong quarters. Total investment demand came in at 54 tonnes.  

Bar and coin purchases declined 19% from the previous quarter to 50 tonnes, although they remained 9% above last year's level. Demand during the first half of 2026 was the highest seen in 13 years. 

ETF inflows also slowed after strong additions in the previous quarter. By the end of June, ETF holdings had increased to 119 tonnes, while assets under management reached ₹1.7 lakh crore. 

Supply Declines, Gold Loan Demand Grows 

Gold supply fell to 120 tonnes, the lowest second-quarter level in six years, as bullion imports dropped 53% quarter-on-quarter and 22% from a year ago following the import duty increase.  

According to the WGC, existing inventories and recycled gold continued to meet market requirements. The report also noted that households were largely holding on to existing jewellery instead of selling it.  

Outstanding bank gold loans doubled over the past year to ₹5.1 lakh crore, while gold loan books of non-banking financial companies rose 70% to ₹3.3 lakh crore. 

Read More: India Proposes Tax Relief Extension for Contract Manufacturers! 

Conclusion 

The second quarter saw lower physical gold demand but higher spending as elevated prices increased the value of purchases. Investment demand moderated, while borrowing against gold continued to rise. 

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