Investment demand for gold in India jumped 54% year-on-year to 82 tonnes in Q1 2026 as record prices shift consumer preference toward financial assets. While jewellery demand has softened, Gold ETFs and digital platforms are seeing record inflows, signaling a permanent change in how Indians allocate capital into the metal.
India’s gold market is undergoing a significant transformation as record-high prices reshape consumer behavior. With 24-carat gold prices climbing toward ₹1.45 lakh per 10 grams, a sharp increase from the previous year, Indian households are increasingly prioritizing gold as a financial investment over traditional physical jewellery.
Shift Toward Financial Assets
Data from the World Gold Council for the first quarter of 2026 shows that investment demand, which includes bars, coins, and Gold ETFs, rose 54% compared to the same period last year. This segment now accounts for nearly 70% of the total gold demand in India. In contrast, demand for physical jewellery has dropped, with its share falling to approximately 30%, the lowest level recorded since 2000. While total spending on jewellery reached ₹99,900 crore in the first quarter, the actual weight of gold purchased fell as consumers opted for lighter or lower-carat designs to stay within their budgets.
Digital Adoption and ETF Growth
The move toward financial gold is supported by the rapid adoption of digital investment vehicles. Assets under management for Gold ETFs in India experienced a massive increase, growing from ₹59,000 crore in March 2025 to over ₹1.7 lakh crore by March 2026. This trend is driven largely by younger investors who prefer the convenience of mobile apps and Systematic Investment Plans (SIPs) to purchase gold, effectively bypassing traditional challenges such as making charges, storage safety, and concerns over purity.
Market Implications
This structural change suggests that while cultural demand for gold during weddings remains a steady foundation, the primary direction of the market is now dictated by financial objectives. The integration of fintech platforms and the ease of holding gold in demat accounts have made it easier for investors to treat the metal as a standard component of their investment portfolios, similar to mutual funds. For investors, this shift indicates that gold liquidity is improving through financial products, even as physical jewellery consumption faces pressure from high prices.
Monitoring Future Trends
Investors may monitor whether this trend continues as gold prices stabilize or if consumers return to traditional jewellery buying. The key factors to track include the sustained growth of Gold ETF assets under management and the evolution of consumer spending patterns during upcoming festive seasons. If the preference for digital gold persists, it may lead to reduced volatility in demand compared to the cyclical nature of physical jewellery, which is highly dependent on seasonal festivities and marriage dates.