India's Gold Demand Projected to Hit Six-Year Low in 2026 Amid High Prices and Rural Pressures

India's gold demand is expected to fall to a six-year low in 2026, as elevated prices weigh on jewellery sales and investment demand moderates, according to the World Gold Council (WGC).

As the world's second-biggest gold consumer after China, the country is grappling with rising living costs in the wake of the Iran war. Additionally, a weak monsoon has curtailed rural demand for jewellery.

Jewellery demand fell in the first nine months of the year, dragging down total demand to around 650 metric tonnes. This marks the lowest level since 2020, when the COVID-19 pandemic forced jewellery shops to close, Sachin Jain, chief executive of the WGC's Indian operations, stated.

Gold demand fell 29 per cent year-on-year to 162.5 metric tonnes in the September quarter. During this period, jewellery purchases declined by 20 per cent, while investment demand dropped by 40 per cent, according to Jain.

Demand is likely to see some improvement in the December quarter, supported by key festivals such as Diwali and the wedding season, which traditionally drive purchases. Indians celebrated Dussehra in October and observed Diwali in early November, periods when buying gold is widely considered auspicious.

However, high prices and weakness in the rural economy following a poor monsoon are expected to cap overall demand, the WGC noted in a report published on Tuesday. More than half of India's gold demand originates from rural areas, where jewellery serves as a traditional store of wealth for millions of households.

The monsoon delivered its lowest rainfall in more than a decade in 2026, curbing agricultural production and subsequently reducing farmers' incomes. Furthermore, India's gold imports fell in the September quarter, partly due to a rise in unofficial inflows after the government raised import duties on the precious metal earlier this year, Jain added.

"The projected decline in India's gold demand highlights how macroeconomic pressures, including high retail prices and agricultural setbacks, directly impact traditional consumer spending patterns. With rural areas accounting for over half of the country's gold consumption, a weak monsoon and reduced farm incomes create a cascading effect across related retail and investment sectors. Businesses dependent on discretionary spending and rural liquidity must navigate these broader economic headwinds carefully as consumer behavior shifts toward essential goods during periods of rising living costs." — Dr. Shishir Gupta, Founder & CEO, StartupLanes