Indian Gold Demand Falls 29% to 162.5 Tonnes in Third Quarter
Key Facts
Total Indian gold demand fell 29% year on year to 162.5 tonnes in the third quarter of 2026, while rising 24% from the second quarter, according to a World Gold Council report published on November 3. Despite the decline in volumes, demand value rose 3% year on year to 2,419 billion rupees, equivalent to 25 billion dollars. The gap between volume and value reflects higher purchase costs as local prices climbed. Quarterly performance followed a decline in demand from a year earlier, but improved from the previous quarter. The council said differences in festival timing between the two years contributed to the annual comparison, alongside a higher comparison base.
The average local gold price was 148,891 rupees per 10 grams in the third quarter, up 45% from the same period last year, but down 1% from the second quarter. The average international price was 4,262 dollars per ounce, up 23% year on year and down 5% quarter on quarter. The World Gold Council linked support for local prices to the rupee's weakness and higher import duties. The comparison shows local prices rose sharply year on year, even as the average edged down from the previous quarter. Higher prices helped lift demand value despite a decline in the weight purchased.
Among investment demand components, bar and coin purchases rose 9% quarter on quarter to 55 tonnes, but remained 40% below their level a year earlier. The council attributed part of the annual decline to a high comparison base and investors' purchases returning to more moderate levels as price momentum eased. It also said the 9 percentage point increase in gold import duties in May may have affected demand for these products. In contrast, gold exchange-traded funds saw demand rise to 5.3 tonnes in the third quarter, from 3.6 tonnes in the second quarter. Holdings in those funds reached about 124 tonnes at the end of the quarter.
The council said festivals that supported demand in the third quarter last year shifted this year to the October–December period, while the Onam and Varalakshmi occasions fell in August. The shift of some occasions meant the third quarter did not receive the same seasonal support seen in the year-earlier comparison. On the supply side, the council estimated total Indian gold supply at 136 tonnes, down 43% year on year. Net official and unofficial bullion imports amounted to 114 tonnes, or about 84% of supply. Supply volumes fell alongside demand, while imports remained a major source of supply, according to the council's estimates.
Official bullion imports, including doré gold, fell to 64 tonnes in the third quarter, down 70% from the same period a year earlier. The council attributed the decline to weak physical demand and inventory adjustments, as well as the possible deferral of imports as major festivals shifted to October instead of September 2025. At the same time, unofficial flows were estimated at about 50 tonnes, compared with 3 tonnes in the third quarter of 2025, when import duties were 6%. The council said the increase in duties to 15% in May raised the incentive for flows through unofficial channels. Its estimates show a divergence between lower official imports and higher unofficial flows during the quarter.
From January to September 2026, total demand fell 12% to 443.9 tonnes, while its value rose 38% to 6,667.2 billion rupees, according to a table in the report. A survey conducted by the council and Kantar of 1,957 consumers found that the share intending to increase jewellery purchases over the following three months rose to 29% in the September wave, from 20% in the first wave. The survey offers an indication of improving purchase intentions ahead of the holiday season, alongside the continued impact of high prices on demand volumes. Attention in the fourth quarter is turning to the holiday and wedding season, including Diwali, which the council expects to provide seasonal support. But it warned that high prices and a weak rural economy after a poor monsoon season could curb demand, while investment may remain sensitive to price momentum.
In a separate estimate cited by Reuters from the World Gold Council's head of operations in India, Indian gold demand could reach about 650 tonnes in 2026, its lowest level since 2020. The estimate comes as more than half of Indian gold demand depends on rural areas, according to Reuters. The agency added that the 2026 monsoon season recorded its lowest rainfall in more than a decade, reducing agricultural output and farmers' incomes. These factors leave the holiday and wedding season facing the challenge of supporting purchases amid high prices and weak incomes for a large share of consumers. The World Gold Council sees seasonal demand improving in the fourth quarter, while prices and rural conditions remain factors that could limit the recovery.