India’s gold market is shifting toward investment‑driven demand as high prices weigh on jewellery consumption.
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NEW DELHI — India’s gold market is shifting toward investment‑driven demand as high prices weigh on jewellery consumption, a report said on Friday.
The joint report from ICRA and Assocham said that India's gold jewellery demand declined about 26 per cent year‑on‑year in the first half of FY26, with a 15 per cent rise in demand for bars and coins partly offsetting the dip.
Global gold jewellery consumption fell 15 per cent in FY25 and a further 17 per cent in the first half of FY26 due to rising prices.
However, investment demand for bars, coins and exchange‑traded funds jumped 74 per cent and 60 per cent, respectively year‑on‑year.
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"Going ahead, high prices may continue to weigh on jewellery demand in the near term, though rising investment demand, expansion of organised players and increasing financialization are expected to support the sector’s medium-term growth," the report predicted.
India emerged as the world’s largest gold jewellery consumer, surpassing China, accounting for 30 per cent of global demand in FY25, supported by strong cultural demand linked to weddings and festivals.
Central banks have remained significant buyers of gold in recent years, with annual purchases exceeding 1,000 tonnes between FY2023 and FY2025, supporting prices amid global economic uncertainty.
Gold prices rose around 33 per cent in FY25 and over 50 per cent so far in the current fiscal, driven by central bank buying, geopolitical tensions and depreciation of the rupee against the US dollar.
On the supply side, India continues to rely heavily on imports due to limited domestic mining, with imports accounting for around 85–88 per cent of the total supply in recent years.
Global mine production has remained relatively stable in recent years providing 70 per cent of supply. The report noted that gold recycling has gained some traction in India in recent years, partially supplementing supply.
Mandatory hallmarking has also significantly improved purity assurance and recycling efficiency, it said, lauding India Good Delivery Standards (IGDS) for strengthening domestic refining and aligning Indian bars with global benchmarks.
The organised segment accounts for around 40 per cent of the gold jewellery market, with players expanding through franchise-led models and increasing presence in tier 2 and 3 cities, the report estimated.