Virendra Pandit
New Delhi: India’s gold demand fell 6 per cent year-on-year to 131.4 tonnes in the April-June quarter of 2026-27, weighed down by seasonally subdued sales, higher customs duty and Prime Minister Narendra Modi’s appeal to reduce purchases of the precious metal, the World Gold Council (WGC) said in a report.
The total demand was at 139.7 tonnes during the corresponding period last year, according to WGC’s ‘Q2 2026 Gold Demand Trends’ report, the media reported on Thursday.
“However, it’s been a record in terms of the value of demand. So, consumption was Rs 1,98,100 crores, compared with Rs 1,32,500 crores in the same period in 2025, which is up by 50 per cent compared to the second quarter of 2025, highlighting that consumers continue to prioritise gold even in a high-price environment,” a news outlet quited Sachin Jain, WGC Regional CEO, India, as saying.
In the next quarters of FY27, WGC estimated the demand to stay between 650 and 750 tonnes.
“However, given the current geopolitical landscape, interest rates, and inflation, I think we should be somewhere in the middle of this range. If there is more correction in gold prices and the customs duty is reduced, then we could get to the upper end of this range.”
Total Jewellery demand in India during the quarter under review decreased by 15 per cent to 75.1 tonnes as compared to 88.8 tonnes in the same period last year.
‘Subdued season, the clarion call of the Prime Minister to buy less gold and hike in customs duty, among others, impacted the demand, he added.
Prime Minister Narendra Modi, in May this year, urged people to reduce non-essential gold purchases and explore other ways to save foreign exchange reserves amid mounting import bills of the country due to volatile crude oil prices because of the ongoing war in West Asia.
Jain expressed concern about a rise in grey marketing after the duty hike, noting reports of illicit gold already making its way into these markets.
“We think smuggling and illicit gold making way into the market is the biggest risk to the industry, and we are already getting reports on this. We will be tracking this in the coming quarters,” he added.
Meanwhile, investment demand remained encouraging, with bar and coin demand growing 9 per cent year-on-year to 50.3 tonnes, while Indian Gold ETFs attracted 4.2 tonnes of net inflows despite global outflows.
“These trends reinforce gold’s growing appeal not only as a traditional store of wealth but also as a strategic investment that provides stability and diversification in an increasingly uncertain economic environment. Looking ahead, the festive and wedding season in the second half is expected to support demand. While elevated prices may continue to influence buying patterns, Indian consumers have consistently demonstrated their ability to adapt,” Jain said.
The WGC data showed that total gold recycled in India in the April-June quarter declined by 17 per cent to 19.2 tonnes, compared to 23.1 tonnes in the same period last year.
Total gold imports in India in the second quarter of 2026 were 98.1 tonnes, down by 23 per cent compared to 127.4 tonnes recorded in the corresponding period of 2025.
The average gold price in the second quarter was USD 4,506.3 an ounce in comparison to USD 3,280.4 in the corresponding period of 2025.
In India, the average quarterly price of gold during April-June was Rs 1,50,744.8 (without import duty and GST) in comparison to Rs 94,875.9 in the same period last year.
Grey market
Gold smuggling fell to 69.2 metric tons in 2024 from 156.1 tons a year earlier, and declined further in 2025 to 20.4 tons after India cut import duties on gold.
India has seen a rise in unofficial gold inflows since the government raised import tariffs on the precious metal earlier this year, widening margins for grey-market operators and hurting organised players, the WGC said on Thursday.
India, the world’s biggest gold consumer after China, more than doubled import tariffs to 15 per cent on May 13 to curb demand, cut the trade deficit and ease pressure on the rupee.
“The arbitrage is so huge. I mean, with the 15 per cent duty and 3 per cent GST, there’s an 18 per cent difference, and that almost spurs an entire industry,” Jain said.
Grey market inflows and the disruption they cause are hurting organised players, he said.
Indian law enforcement agencies seized nearly twice as much gold between May 13 and June 30 as they did between April 1 and May 12, with seizures rising to 160.91 kg from 86.16 kg, the government told parliament earlier this month.
Gold smuggling fell to 69.2 metric tons in 2024 from 156.1 tons a year earlier, and declined further in 2025 to 20.4 tons after India cut import duties on gold, according to the WGC data.
The recent resurgence in the grey market suggests illegal imports could exceed 100 tons in 2026, industry officials said.
India’s net gold imports fell 23 per cent year-on-year to 98.1 tons in the June quarter, the lowest quarterly level since September 2020, when pandemic-induced lockdowns curbed demand, the WGC said.
Demand is likely to improve in the second half of the year if prices remain stable, as many consumers who missed the earlier rally are expected to return to the market, Jain said.