Six-year low seen for India gold demand in 2026 on price and monsoon drag

The retreat of Indian buyers removes a key physical support pillar for gold, making prices depend more heavily on central bank acquisitions and fund inflows. Reduced imports would relieve some pressure on India's trade balance and give the rupee a small boost, although the increase in unofficial inflows, according to reports, means actual demand could be higher than official import figures suggest. The upcoming Diwali and wedding season will provide the near-term test; a subdued festival response would signal that current price levels have exceeded what Indian households are willing to pay. For the global gold market, this reinforces a pattern where official demand remains strong while price-sensitive consumers step back.

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A previous report:

• Central bank gold buying surges 42% in Q3, with high prices dampening jewellery demand, WGC says

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The world's second-biggest gold buyer is retreating, forced out by gold's price surge and strained by a weak monsoon, right as its main buying season gets underway.

Key points in summary:

• The WGC anticipates India's 2026 gold demand will decline to roughly 650 tons, its lowest level since 2020.
• In the September quarter, demand dropped 29% year-on-year to about 160 tons; jewellery was down 20% and investment demand slumped 40%.
• Higher living expenses following the Iran war, combined with the weakest monsoon in over ten years, are hurting rural purchasing.
• Rural regions represent over half of India's total gold consumption.
• Festival and wedding demand is expected to boost the December quarter, though high prices should limit any rebound.
• Official import figures fell partly because of increased unofficial inflows following the rise in import duties.

On Tuesday, the World Gold Council said India's gold demand in 2026 is projected to hit a six-year low, as elevated prices depress buying and investment demand weakens, according to Reuters.

The trade group forecasts that total demand in the world's second-biggest gold market will drop to roughly 650 metric tons for the year. This marks the lowest point since the 2020 pandemic shutdowns of jewellery retailers. Sachin Jain, chief executive of the council's Indian operations, told Reuters that reduced jewellery sales during the first nine months of 2026 would pull down the full-year figure.

In the quarter ending September, demand was 29% lower than a year prior at roughly 160 tons, according to Jain. Jewellery buying decreased by 20%, and investment demand was down by 40%.

These numbers indicate that elevated gold prices are affecting Indian consumers more severely than the global market. The council's global report, also released on Tuesday, indicated that worldwide demand in the third quarter was broadly unchanged year-on-year, as robust central bank purchases compensated for softer jewellery and retail investment.

Indian families are additionally contending with higher living expenses since the Iran war, and the weather has compounded the pressure. The 2026 monsoon produced its lowest rainfall in over ten years, reducing agricultural yields and earnings in rural districts. These rural regions make up over half of the nation's gold demand, where jewellery acts as a customary repository of wealth.

Jain stated that demand is expected to recover in the December quarter, as festivals and the wedding season customarily boost sales. Diwali, a time when gold buying is viewed as propitious, occurs in early November. Nonetheless, the council cautioned that high prices and the fragile rural economy would probably limit any recovery.

India's recorded gold imports were also lower in the September quarter. Jain attributed part of the decline to an increase in unofficial imports after the government raised gold import duties earlier this year. That suggests official data may understate how much gold is entering the country.