Indian gold jewellery demand fell 15% to 75 tonnes in the June quarter due to high prices. Despite the volume decline, the value of demand for the first half of 2026 reached $21 billion. This trend highlights how elevated prices are influencing consumer behavior while central banks continue to increase their gold reserves.
The gold market in India witnessed a distinct shift during the second quarter of 2026, as high price levels led to a 15% year-over-year contraction in jewellery demand, which totaled 75 tonnes. This cooling in domestic consumption reflects a broader global struggle, with the World Gold Council reporting that global jewellery demand fell 17% during the same period. Consumers are increasingly choosing lighter-weight jewellery as they navigate the pressure of record gold prices.
Sequential Recovery and Value Dynamics
While the year-over-year figures show a decline, there is a nuance in the sequential data. Indian jewellery demand rose 14% compared to the first quarter of 2026, suggesting a modest recovery in local buying interest. Furthermore, the financial value of this demand tells a different story than the volume. For the first half of 2026, the value of Indian demand reached $21 billion, a 26% increase compared to the same period last year. This disparity between lower volume and higher value illustrates that the total cash flowing into the gold market remains elevated due to sustained high price points.
Global Trends and Central Bank Support
On the global stage, the demand narrative is being driven by institutions rather than just retail consumers. Central banks were significant buyers in the second quarter, adding 289 tonnes to their reserves, a 62% jump compared to last year. The Reserve Bank of India contributed to this trend with a modest addition of 200 kg. While retail investment through gold-backed exchange-traded funds saw net outflows of 45 tonnes in the second quarter, the over-the-counter market—often driven by large-scale institutional and Asian investors—provided a buffer, recording 327 tonnes in demand.
Risks and Market Monitorables
For investors and companies operating in the jewellery sector, the primary risk remains price sensitivity. Persistent high prices may continue to pressure retail volumes, potentially impacting the revenue growth of jewellery retailers who rely on mass-market turnover. Investors should track how these companies manage inventory costs and whether they can maintain profit margins in an environment where consumers are shifting toward lower-weight or value-engineered products. Future performance in the second half of the year will depend largely on whether consumer sentiment adapts to these price levels and how central bank buying patterns evolve in response to global monetary policies and real yields.