The precious metal transcends its status as a mere expensive commodity in India, holding a cherished position as a family heirloom passed down through generations. Last year witnessed the yellow metal achieving record price highs, which ignited both a buying frenzy and considerable market tension.
2026 Demand Forecast: A Significant Downturn
Indian weddings traditionally sparkle with gold, and investment portfolios often lean on it for stability. However, as 2026 approaches, the World Gold Council (WGC) presents a picture of shifting market dynamics. Total gold demand is experiencing a dip following last year's slump, primarily caught in the grip of persistently sky-high prices that are significantly curbing jewellery purchases.
India's gold demand is projected to potentially drop to a range between 600 and 700 metric tons in 2026. This marks a decline from the 710.9 tons recorded in 2025, which itself was the lowest level in five years following an 11% annual decline. Sachin Jain, the CEO of WGC India, informed Reuters that this forecasted range directly reflects the intense price pressures impacting consumers. While investment demand is showing signs of picking up, ongoing weakness in the jewellery sector continues to drag the overall demand numbers lower.
Jewelry Demand Plummets Following Price Hikes
The demand for gold jewellery witnessed a dramatic crash of 24% in 2025, falling to 430.5 tons. This figure represents the lowest level in nearly three decades, excluding the COVID-19 impacted year of 2020. According to a detailed Reuters report, Jain elaborated on this trend, stating, "Jewellery buyers generally prefer stable gold prices, but the volatile and significant price increases observed in recent months have far outstripped the budgets of average consumers." These elevated costs compelled many families to either skip or postpone their traditional gold purchases during the crucial wedding season, a period that typically sees high jewellery sales.
Investment Demand Takes Off Significantly
In a contrasting trend, investor appetite for gold surged remarkably. Investors snapped up 280.4 tons of gold in 2025, marking a substantial 17% jump and reaching the highest volume since 2013. Consequently, investment demand now accounts for nearly 40% of India's total gold demand, effectively doubling its usual historical share.
Gold Exchange-Traded Funds (ETFs) experienced particularly strong growth, with inflows skyrocketing by 283% to reach ₹429.6 billion. Jain noted this shift, commenting, "Inflows into exchange-traded funds are expected to continue their growth trajectory. The stock market did not perform robustly in 2025, prompting investors to seek better and more stable returns from gold assets." This search for alternatives is underscored by the performance disparity: while the Nifty index managed a modest climb of just 10.5%, gold prices soared by an impressive 76.5% during the same period.
Understanding the Market Transformation
The World Gold Council analysis suggests that the equity markets may remain subdued and less attractive to investors going forward. This outlook is attributed to factors such as high stock valuations, potential tariffs, and foreign capital outflows. As a result, a gradual but steady shift from jewellery-centric demand to pure investment demand is anticipated. This transition is expected to continue supporting robust sales of gold bars and coins, as a growing number of investors pivot towards gold as a preferred asset class while traditional stock market returns lag behind.
