India's gold demand volume dropped 6% to 131 tonnes in the second quarter of 2026, yet record high prices pushed total spending to an all-time high of ₹1.98 lakh crore. Investors and consumers are pivoting toward lighter ornaments and exchange schemes to manage elevated costs, while import duty changes have led to a six-year low in bullion supply.
India’s gold market witnessed a distinct shift in the April-June 2026 quarter, where high prices dampened the weight of gold purchased while simultaneously driving spending to a record level. Despite a 6% year-on-year decline in demand volume to 131 tonnes, total expenditure on the yellow metal reached ₹1.98 lakh crore. This disparity reflects the impact of domestic gold prices, which remained nearly 59% higher than the previous year due to currency depreciation and changes in import duties enacted in mid-May.
Shift in Consumer Buying Behavior
Jewellery demand saw a sequential rise of 14% to reach 75 tonnes, supported by seasonal buying during Akshaya Tritiya and the wedding season. However, this recovery was not enough to surpass the previous year's levels, marking this as one of the weakest second quarters for jewellery demand in two decades. To maintain their gold holdings despite higher costs, consumers are opting for lighter-weight ornaments and lower-carat jewellery. Retailers have reported that exchange schemes—where customers trade in old gold to fund new purchases—now account for up to 70% of sales in some regions, reflecting a strategic adaptation to current market pricing.
Investment Trends and ETF Flows
Investment demand for bars, coins, and gold ETFs moderated to 54 tonnes during the quarter, cooling off after three consecutive quarters of robust growth. The purchase of gold bars and coins fell by 19% sequentially as buyers adopted a cautious approach following a sharp price rally. Simultaneously, inflows into gold ETFs slowed significantly compared to the record highs seen in the March quarter. Despite this deceleration, India continues to be an outlier with positive ETF inflows, while markets in the US and China have seen investors withdrawing funds. Total assets under management in Indian gold ETFs reached ₹1.7 lakh crore by the end of June.
Supply Dynamics and Import Impact
Supply constraints defined the quarter as total gold availability dipped to a six-year low of 120 tonnes. A 53% sequential decline in bullion imports, triggered by higher import duties, played a central role in this contraction. Even with reduced imports, there were no reported shortages in the domestic market, as high inventory levels and a rise in recycled gold helped satisfy demand. Instead of selling old jewellery outright, many consumers are increasingly leveraging it as collateral for loans, which has helped sustain gold ownership.
Going forward, the market will monitor whether the current trend of using recycled gold and exchange schemes remains the primary driver of supply. Investors may track if persistent high prices continue to suppress volume demand, or if festive season requirements in the coming months bring a resurgence in traditional purchasing patterns.