Rising prices and weak monsoon to push India's gold demand down to a six-year low

According to reports by The Economic Times and Business Standard, record-high gold prices, rising inflation, and a weak monsoon are making gold very expensive for Indian buyers. The World Gold Council (WGC) has stated that due to these factors, India's gold demand is expected to drop to a six-year low of around 650 tonnes in 2026. After China, India is the world's largest consumer of gold, which is currently grappling with rising costs of living in the wake of the Iran war.

Sachin Jain, CEO of the World Gold Council's Indian operations, stated that jewellery demand declined in the first nine months of the year itself, causing total demand to drop to its lowest level since 2020, at approximately 650 metric tonnes. Notably, in 2020, jewellery shops were forced to remain closed due to the COVID-19 pandemic. Sachin Jain further stated that in the September quarter, gold demand fell by 29 percent year-on-year to 162.5 metric tonnes. During this period, a 20 percent decline was recorded in jewellery purchases, while a sharp fall of 40 percent was seen in investment demand.

According to reports, more than half of India's total gold demand comes from rural areas, where jewellery is considered a traditional store of wealth for millions of people. In 2026, rainfall during the monsoon was recorded at less than a decade's average, which has adversely affected agricultural production and reduced farmers' incomes. The WGC warned in a report published on Tuesday that a weak rural economy and high prices will limit gold demand.

However, a slight recovery in demand is projected for the December quarter. In October, citizens celebrated Dussehra, and the Diwali and wedding season is beginning in early November, during which purchasing gold is considered auspicious. According to Sachin Jain, these major festivals and the wedding season will give a boost to gold purchases.

In addition, India's gold imports also decreased in the September quarter. One of the reasons for this is that the government increased the import duty on the precious metal earlier this year, which led to an increase in unofficial inflows. Thus, amid high prices and adverse economic conditions, the picture of gold purchases in the Indian market is seen changing.