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India Gold Demand Hits 6-Year Low Amid Price Surge
30 Jul
Summary
- Gold demand in India fell to a six-year low in the April-June quarter.
- Record high prices and increased import duties deterred consumers.
- Indians increasingly used gold loans instead of selling their assets.
India's gold demand experienced its sharpest decline in six years during the April-June quarter, reaching its lowest point since 2018. Record-high domestic prices and a substantial increase in import duties to 15% significantly dampened consumer interest. Jewellery demand, typically robust, fell 15% year-on-year, despite a brief uplift from the Akshaya Tritiya festival and wedding season purchases.
Investment demand also saw a reduction after several strong quarters. Total investment, including bars and coins, dropped to 54 tonnes. However, the precious metal's appeal as a hedge against global uncertainty persisted. Amidst declining fresh purchases, consumers increasingly turned to gold loans, with outstanding loans more than doubling, reflecting a preference to access liquidity without selling their gold.
The World Gold Council noted an increase in gold smuggling following the duty hike. For the full year 2026, India's gold demand is projected to remain between 650-750 tonnes. While gold loans have become a major retail lending segment, the council cautioned about potential credit risks if gold prices were to fall significantly.
