India's Gold Demand Drops 6% in April-June Quarter Amid Higher Duty and Seasonal Weakness

India's gold demand fell 6 per cent year-on-year to 131.4 tonnes in the April-June quarter of 2026, according to the World Gold Council (WGC). The decline was driven by seasonally weak sales, a higher customs duty, and Prime Minister Narendra Modi's appeal to reduce gold purchases. In the same period last year, demand stood at 139.7 tonnes.

Despite the drop in volume, the value of demand reached a record high of ₹1,98,100 crore, up 50 per cent from ₹1,32,500 crore in the second quarter of 2025. Sachin Jain, WGC's Regional CEO for India, noted that consumers continue to prioritise gold even in a high-price environment.

For the full year, the WGC projects demand between 650 and 750 tonnes. Jain said that given the current geopolitical landscape, interest rates, and inflation, demand is expected to be in the middle of that range. A reduction in customs duty or a further correction in gold prices could push demand to the upper end.

Jewellery demand fell sharply, down 15 per cent to 75.1 tonnes from 88.8 tonnes a year earlier. Jain attributed this to the subdued season, the Prime Minister's appeal, and the customs duty hike.

In May 2026, Prime Minister Modi urged citizens to reduce non-essential gold purchases to help conserve foreign exchange reserves amid rising import bills due to volatile crude oil prices.

Jain expressed concern over a potential rise in grey market activity following the duty hike, with reports of illicit gold entering the market. He noted that smuggling is the biggest risk to the industry and that the WGC will track this in coming quarters.

Investment demand, however, remained strong. Bar and coin demand grew 9 per cent year-on-year to 50.3 tonnes, and Indian gold exchange-traded funds (ETFs) saw net inflows of 4.2 tonnes despite global outflows. Jain said these trends reinforce gold's appeal as both a traditional store of wealth and a strategic investment offering stability and diversification in uncertain economic times.

Looking ahead, the festive and wedding season in the second half of the year is expected to support demand. While high prices may continue to influence buying patterns, Indian consumers have shown adaptability.

Total gold recycled in India declined 17 per cent to 19.2 tonnes in the quarter, compared to 23.1 tonnes a year earlier. Gold imports fell 23 per cent to 98.1 tonnes from 127.4 tonnes.

The average gold price in the second quarter was $4,506.3 per ounce, up from $3,280.4 a year earlier. In India, the average quarterly price rose to ₹1,50,744.8 (excluding customs duty and GST) from ₹94,875.9.