A Clear Reversal in Key Categories (Image Credits: Unsplash)
Mumbai – Investment demand for gold in India climbed to 82 metric tonnes in the March quarter, eclipsing jewellery consumption at 66 tonnes for the first time ever.[1][2] The World Gold Council highlighted this shift in its latest report, noting a 52 percent year-on-year surge in investments that offset a 19.5 percent drop in jewellery buying.[1] High prices and lackluster equity returns steered consumers toward bars, coins, and exchange-traded funds rather than ornaments.
Total demand held steady with a 10 percent rise to 151 tonnes, though values soared nearly twofold due to elevated prices.[2] This marked a structural change in the world’s second-largest gold market, where investments traditionally accounted for just a quarter of consumption.
A Clear Reversal in Key Categories
The numbers revealed a stark contrast between the two main drivers of demand. Investment products captured 54.3 percent of total consumption, the highest share since records began in 2000.[2] Jewellery, long the dominant force, fell to around 44 percent on a net basis after accounting for recycling.
| Category | Q1 2026 (tonnes) | YoY Change | Value Change (INR) |
|---|---|---|---|
| Investment (total) | 82 | +52% | +179% |
| – Bars & Coins | 62 | +34% | +142% |
| – ETFs | 20 | +186% | +437% |
| Jewellery | 66 | -19.5% | +47% |
| Total Demand | 151 | +10% | +99% |
Bars and coins led the investment rally at 62 tonnes, nearly matching jewellery volumes, while ETFs hit a quarterly record.[2] Recycling supplied 31 tonnes, up 20 percent, as owners traded old pieces amid price peaks.
High Prices Reshape Consumer Choices
Domestic gold prices averaged 151,108 rupees per 10 grams, up 81 percent from a year earlier, and peaked above 175,000 rupees.[2] This squeezed affordability for jewellery, especially in the mass market, prompting a pivot to lighter designs, lower-carat options, and studded pieces.
Sachin Jain, chief executive of World Gold Council’s Indian operations, observed, “For the first time investment demand surpassed jewellery demand.”[1] Volatility during festivals like Akshaya Tritiya saw volumes drop 30 percent, with buyers exchanging old gold in 40 to 60 percent of transactions.[3] Investors, meanwhile, viewed gold as a hedge against rupee weakness and geopolitical tensions.
ETFs Emerge as a Key Driver
Gold exchange-traded funds drew record inflows of 20 tonnes, up 186 percent year-on-year, pushing total holdings to 115 tonnes worth 1.7 trillion rupees.[2] January accounted for 80 percent of these gains, fueled by early price momentum, though flows eased later on profit-taking.
- ETF assets under management rose 191 percent year-on-year.
- Digital gold via UPI platforms saw gross purchases equivalent to 3.3 tonnes in January-February.
- Weak Nifty 50 performance – up just 2.4 percent since early 2025 – drove the shift from equities.[4]
Jain noted that “weak stock market performance in recent quarters has been drawing investors to gold ETFs, and the trend is likely to continue.”[1] Retail and financial investors alike boosted allocations for diversification.
Broader Implications for Stakeholders
Jewellers faced pressure from deferred purchases and elevated retail inventories of 31 tonnes, well above the long-term average.[2] Imports jumped 58 percent to 186 tonnes, supporting supply despite the jewellery slowdown. Gold loans outstanding reached 4.3 trillion rupees, up 124 percent, signaling liquidity needs among households.
Investors benefited from gold’s role as a store of value, with India claiming 13 percent of global bar-and-coin demand and 32 percent of ETF flows.[2] The Reserve Bank of India held steady at 880 tonnes in reserves, now 17 percent of forex holdings.
This quarter’s data underscored a maturing market where investment preferences gain ground. As prices stabilize and equities falter, gold’s dual appeal – as both asset and heirloom – positions it to anchor consumption amid economic headwinds.[4] Jain predicted that “investment demand will become increasingly prominent in the coming quarters.”[1]
