India’s gold market is experiencing a shift towards investment-driven demand due to high prices impacting jewellery consumption, according to a joint report by ICRA and Assocham. The report revealed a 26% year-on-year decline in India’s gold jewellery demand in the first half of FY26, with a 15% increase in demand for bars and coins partially offsetting the decrease. Global gold jewellery consumption also saw a significant drop of 15% in FY25 and an additional 17% decline in the first half of FY26, attributed to the rising prices.
Investment demand for bars, coins, and exchange-traded funds witnessed a substantial increase, with a 74% and 60% year-on-year jump, respectively. Despite the current scenario where high prices are likely to continue impacting jewellery demand in the short term, the report predicts that rising investment demand, the expansion of organized players, and increasing financialization will support the sector’s medium-term growth. India has emerged as the largest gold jewellery consumer globally, surpassing China, accounting for 30% of the global demand in FY25, driven by strong cultural demand associated with weddings and festivals.
Central banks have been significant buyers of gold in recent years, with annual purchases exceeding 1,000 tonnes between FY2023 and FY2025, contributing to price support amid global economic uncertainties. Gold prices have surged by approximately 33% in FY25 and over 50% in the current fiscal year, primarily fueled by central bank purchases, geopolitical tensions, and the rupee’s depreciation against the US dollar. India heavily relies on imports for its gold supply due to limited domestic mining, with imports constituting around 85-88% of the total supply in recent years.
Global mine production has remained relatively stable, providing 70% of the supply, while gold recycling has gained traction in India, partially supplementing the supply. The implementation of mandatory hallmarking has significantly enhanced purity assurance and recycling efficiency, with India Good Delivery Standards (IGDS) playing a crucial role in strengthening domestic refining and aligning Indian bars with global standards. The organized segment holds a 40% share in the gold jewellery market, with players expanding through franchise-led models and increasing their presence in tier 2 and 3 cities, as estimated by the report.
