Higher customs duty and PM Modi’s appeal to curb purchases to impact gold demand in India despite higher prices
India’s gold demand fell 6 percent year-on-year to 131.4 tonnes in the April-June quarter, down from 139.7 tonnes in the same period last year, according to the World Gold Council’s Q2 2026 Gold Demand Trends report. The decline was driven by seasonally weak sales, an increase in customs duty, and Prime Minister Narendra Modi’s public appeal to cut back on gold purchases.
Record Spending Despite Lower Volumes
Even as physical demand dropped, the value of that demand hit a record high. Consumption totalled ₹1,98,100 crore, up 50 percent from ₹1,32,500 crore in the same quarter last year, according to WGC Regional CEO India Sachin Jain, who said this shows consumers continue prioritising gold even amid elevated prices. Jain added that jewellery demand specifically fell 15 percent to 75.1 tonnes, down from 88.8 tonnes a year earlier, citing the subdued season, Modi’s appeal, and the duty hike as key factors. Modi had urged citizens in May to scale back non-essential gold purchases to help ease pressure on foreign exchange reserves amid rising crude oil import costs.
Investment Demand Holds Strong
Bar and coin demand jumped 9 percent year-on-year to 50.3 tonnes. At the same time, Indian gold ETFs witnessed inflows of 4.2 tonnes of gold compared to outflows from global gold ETFs, said Jain, who added that the metal’s “dual role as a hedge against economic uncertainties as well as an asset class with investment appeal” would see demand rise in the festive and wedding season to meet year-end demand.
Imports and Risks Ahead
Total gold imports came down 23 percent to 98.1 tonnes, and in the recycled category, 17 percent to 19.2 tonnes. Jain also said that gold smuggling activities and the grey market were emerging after the duty hike. They will watch out for such trends in the coming quarters. WGC estimated gold demand this year to range between 650 and 750 tonnes, and they will review the figures depending on price corrections and any changes in duties.
