India’s Gold Market Tilts Toward Investment Demand as Jewellery Sales Decline

Fri Mar 27 2026

India’s gold market is increasingly shifting toward investment-driven demand as soaring prices dampen jewellery purchases, according to a new report released Friday. The joint study by ICRA and Assocham found that gold jewellery demand in India fell about 26 percent year-over-year in the first half of FY26. A 15 percent increase in demand for gold bars and coins partially offset the decline.

Globally, gold jewellery consumption dropped 15 percent in FY25 and fell another 17 percent in the first half of FY26, reflecting the impact of rising prices on consumer buying patterns. At the same time, investment demand surged, with purchases of gold bars and coins jumping 74 percent year-over-year, while exchange-traded funds saw a 60 percent increase.

“Going ahead, high prices may continue to weigh on jewellery demand in the near term, though rising investment demand, expansion of organised players and increasing financialization are expected to support the sector’s medium-term growth,” the report said.

Despite the recent slowdown in jewellery demand, India became the world’s largest gold jewellery consumer in FY25, surpassing China and accounting for 30 percent of global demand. The country’s consumption has traditionally been supported by strong cultural factors tied to weddings and festivals.

Central banks have also played a key role in sustaining gold prices, with annual purchases exceeding 1,000 tonnes between FY2023 and FY2025 amid ongoing global economic uncertainty. Gold prices rose roughly 33 percent in FY25 and have climbed more than 50 percent so far in the current fiscal year, driven by central bank buying, geopolitical tensions, and the depreciation of the rupee against the U.S. dollar.

On the supply side, India remains heavily dependent on imports due to limited domestic mining, with imports accounting for roughly 85 to 88 percent of total supply in recent years. Globally, mine production has remained relatively stable, contributing about 70 percent of total supply. The report noted that gold recycling in India has gained traction, helping to supplement supply.

Regulatory changes have also improved market standards. Mandatory hallmarking has strengthened purity assurance and boosted recycling efficiency, while India Good Delivery Standards have helped align domestically refined gold with global benchmarks. The organized segment now accounts for about 40 percent of India’s gold jewellery market, with companies expanding through franchise-led models and increasing their presence in smaller cities, the report said.

Source: https://indusbusinessjournal.com/