India’s gold demand fell 6% year-on-year to 131.4 tonnes in the April-June quarter, weighed down by seasonally subdued sales, higher import duty and Prime Minister Narendra Modi’s appeal to reduce purchases of the precious metal, the World Gold Council (WGC) said in a report on Thursday.
Jewellery demand declined 15% year-on-year to 75 tonnes, the second-lowest quarterly level in the WGC’s data series since 2000. However, India remained the world’s largest gold jewellery market in the quarter, accounting for 27% of global demand, followed by China at 25%.
In the June 2026 quarter, demand was supported by Akshaya Tritiya and wedding-related buying, as gold prices eased from their Q1 peaks. However, demand weakened from the middle of the quarter due to the month-long inauspicious period from mid-May to mid-June and the 9% hike in import duty.
India has also seen a rise in unofficial gold inflows since the government raised import tariffs on the precious metal earlier this year, widening margins for grey-market operators and hurting organised players.
“The arbitrage is so huge. I mean, with the 15% duty and 3% GST, there’s an 18% difference, and that almost spurs an entire industry,” Sachin Jain, chief executive of WGC’s Indian operations, told Reuters.
Grey-market inflows and the disruption they cause are hurting organised players, Jain added.
Indian enforcement agencies seized nearly twice as much gold between May 13 and June 30 as they did between April 1 and May 12. Seizures rose to 160.91 kg from 86.16 kg, according to data the government shared with Parliament earlier this month.
The WGC’s India demand report, released alongside its global demand report, said exchange-led purchases gained traction as a key source of demand support, aided by aggressive promotion of exchange schemes by jewellers. Retailers reported a 10-20% increase in exchange volumes, with such purchases accounting for up to 70% of sales in some cases. Fresh gold demand, however, was much lower at only 30%.
Investment demand also softened, falling to 54 tonnes in Q2 from an average of 100 tonnes over the preceding three quarters. The decline was sharper in gold exchange-traded funds (ETFs). India’s gold ETF demand fell to 4 tonnes in Q2, down 80% from the record 20 tonnes in Q1 and the lowest level since Q2 2025.
India’s gold supply fell to 120 tonnes in Q2, the lowest level in six years. Net gold imports declined 23% to 98.1 tonnes.
Interestingly, Indian consumers preferred buying new jewellery in exchange for old jewellery rather than encashing their old gold. Net recycling, or gold sold for cash, remained subdued at 19 tonnes in Q2, down 17% from the year-ago quarter.
Going forward, demand is expected to remain price-sensitive and supported by wedding, festive and investment buying. However, high gold prices and a weak monsoon could pose headwinds, the report said.
Globally, total gold demand in Q2 fell 14% to 941.8 tonnes. Jewellery demand declined to its lowest quarterly level since the pandemic at 278 tonnes, while total investment demand fell 46% to 262.2 tonnes.
Gold demand was supported by increased purchases from central banks. Their gold purchases rose 62% year-on-year to 288.9 tonnes in Q2. However, investment demand remained weak globally, with gold ETFs recording net sales of 44 tonnes. Investment demand for bars and coins was down just 3% at 307.1 tonnes.
(With inputs from Reuters)