The World Gold Council (WGC) said on Tuesday that it expects India's gold demand in 2026 to fall to its lowest level in six years, as elevated prices have weighed on jewellery sales and investment demand has also slowed.
Affected by the Iran-related conflict, India is facing rising living costs, while weaker monsoon rainfall could also dampen jewellery demand in rural areas.
Sachin Jain, CEO of the WGC's India operations, said jewellery demand declined in the first nine months of the year, which will drag full-year total demand down to about 650 tonnes, the lowest since 2020, when the COVID-19 pandemic forced jewellery stores to close.
Jain said India's gold demand fell 29% year-on-year in the third quarter (the September quarter) to 162.5 tonnes; of that, jewellery purchases dropped 20%, while investment demand slid 40%.
He noted that gold demand in the fourth quarter (the December quarter) is expected to recover with the arrival of major festivals such as Diwali and the wedding season.
People in India celebrated Dussehra in October and will mark Diwali in early November; buying gold during these periods is considered auspicious.
However, the WGC said in a report released on Tuesday that high gold prices, combined with a weak rural economy caused by poor monsoon rainfall, could weigh on gold demand.
More than half of India's gold demand comes from rural areas; for millions of people there, jewellery is a traditional store of wealth.
In 2026, monsoon rainfall fell to its lowest level in more than a decade, which curbed agricultural production and reduced farmers' incomes.
Jain said India's gold imports declined in the third quarter; part of the reason is that the government raised the gold import tariff earlier this year, leading to an increase in gold inflows through informal channels.
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