economy · 2026-07-30
Why Gold Spend Rose Even as Purchases Fell
Photo: BullionVault / flickr (BY-ND 2.0)
Indians bought 6% less gold by weight in Q2 but spent 50% more (₹1.98L Cr vs ₹1.33L Cr) than last year.Jewellery demand hit a pandemic-era low of 75.1 tonnes, yet jewellery spend jumped 34% on record prices.Buyers switched to lighter, lower-carat options, though bar, coin and ETF investment demand stayed strong.
Why did buyers spend more for less gold?
Gold prices surged so sharply that even 8.3 tonnes less purchased in Q2 still cost ~₹65,000 crore more, per World Gold Council data, taking total spend to a record ₹1.98 lakh crore.
How much did April festivals lift gold demand?
April demand strengthened as Akshaya Tritiya, Gudi Padwa and wedding-related purchases coincided with a correction in gold prices from earlier highs, encouraging buying. That momentum reversed from mid-May through mid-June as a gold import duty hike, Adhik Maas and government import-moderation measures weakened sentiment.
Why did prices dip below ₹1.5 lakh/10g in June?
Domestic prices corrected below the psychologically important ₹1.5 lakh/10g mark in June, and many consumers treated this dip as a buying opportunity, boosting demand for bars, coins and digital gold products rather than waiting further.
What role did old-for-new exchanges play?
According to the World Gold Council's Q2 2026 Gold Demand Trends report, as jewellery demand fell 15% year-on-year, buyers increasingly turned to old-for-new exchange programmes alongside lighter-weight jewellery and lower-carat products to keep purchases affordable amid record gold prices, according to the World Gold Council.
Could import duty hikes have curbed demand?
The govt raised gold import duty from 6% to 15% during the quarter, alongside other measures to moderate imports, which weakened sentiment from mid-May through mid-June.
Why did the 15% duty hike target imports now?
The duty hike came now because gold bar imports had surged sharply (from $36.5 billion in 2022 to $58.9 billion in 2025) worsening forex and trade-deficit pressure, while the rupee was among Asia's weakest currencies and Middle East instability threatened energy flows through the Strait of Hormuz, prompting Modi's prior appeal to curb non-essential gold buying.
How large could gold loans grow from this trend?
India's organised gold loan market, driven by banks and NBFCs, is projected by ICRA to cross ₹30 lakh crore by March 2028, up from around ₹18 lakh crore in March 2026 — implying a compound annual growth rate of more than 30% over FY27 and FY28, fueled by strong retail demand.
Why did global gold ETFs see outflows unlike India
Global gold ETFs saw outflows in June as North America, Europe and Asia (led by China and Japan) all pulled back—China amid improving risk appetite and a weaker gold price, Japan after a Bank of Japan rate hike raised gold's opportunity cost. India defied this trend because local investors stayed optimistic on gold prices and treated the dip as a buying opportunity.
Who gains as buyers shift to lighter jewellery?
Jewellers and organised retailers selling lighter, studded and lower-carat designs benefit, while traditional 22-carat jewellery sellers see weaker demand as buyers trade down.
Does bar and coin demand differ from jewellery?
Jewellery demand fell 15% to 75.1 tonnes as buyers shifted to lighter-weight, lower-carat pieces and old-for-new exchanges to manage affordability amid high prices. Bar and coin demand instead rose 9% to 50.3 tonnes, plus 4.2 tonnes of ETF inflows, showing consumers treated gold as an investment rather than an ornament.
What if rural spends stay weak this festive season
Rural households — the source of nearly 60% of India's gold demand — stand to lose most, per BusinessToday's analysis. During weak-income periods, they postpone jewellery purchases or liquidate existing gold for cash, while poor harvests push many toward costlier informal borrowing and debt traps.
How is urban jewellery demand changing?
Urban buyers turned to studded and lighter designs mainly to manage affordability as gold prices hit records; larger organised retailers saw stronger demand for these styles, while traditional 22-carat jewellery weakened, reflecting a shift toward balancing cost with long-term value amid rising prices.
Source: businesstoday.in