Gold bars, coins attract ₹81,890 crore in India despite 40% demand crash; how does China compare?

India's demand for gold bars and coins plunged 40% year-on-year in the September quarter of 2026, but investors still spent ₹81,890 crore on physical gold. Despite elevated prices and higher import duties, India remained the world's second-largest market for gold bars and coins after China, highlighting the continued appeal of the precious metal as an investment.

According to the World Gold Council's (WGC) latest India Focus report released on Tuesday, demand for gold bars and coins declined to 55 tonnes in July–September 2026 from 91.6 tonnes a year earlier. However, purchases recovered 9% sequentially from 50.3 tonnes in the June quarter.

In value terms, demand declined 13% from ₹93,740 crore in the corresponding quarter last year, significantly less than the 40% contraction in volumes.

India vs China: Who is buying more gold?

China retained its position as the world's largest market for gold bars and coins, followed by India.

According to the WGC report, India accounted for approximately 21% of global bar and coin demand during Q3 2026.

Chart 5 of the report indicates that China's demand stood at approximately 80 tonnes during the September quarter, compared with India's 55 tonnes. The Chinese figure is an approximate reading from the chart.

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This suggests Chinese investors purchased roughly 25 tonnes more gold bars and coins than Indian investors during the quarter.

However, the two markets showed different sequential trends. While India's demand increased 9% quarter-on-quarter, China's purchases declined from approximately 108 tonnes in the preceding quarter, according to the chart.

Despite the sharp annual contraction, India's position as the second-largest market underscores the continued importance of physical gold investment.

India vs China: Gold bar and coin demand in Q3 2026

Why are Indians still buying physical gold?

Gold bars and coins remained India's largest gold investment channel during the September quarter.

Physical gold continues to appeal to investors seeking direct ownership, long-term wealth preservation and protection against economic uncertainty.

Unlike jewellery, bars and coins are primarily purchased for investment purposes, although premiums, storage costs and resale spreads can influence actual returns.

The WGC attributed the annual decline partly to a high base in 2025 and moderation in investment buying as earlier price momentum faded.

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India's gold bar and coin demand — Q3 2025 vs Q3 2026

How are higher prices affecting demand?

Average domestic gold prices increased 45% year-on-year to ₹1,48,891 per 10 grams during Q3 2026, compared with ₹1,02,287 a year earlier.

The nine-percentage-point increase in gold import duty in May also affected demand.

The WGC said its econometric models indicate that bar and coin purchases are particularly sensitive to changes in import duties and income levels, with higher duties generally weighing on demand.

Are investors shifting towards gold ETFs?

Overall gold investment demand increased 12% sequentially to approximately 60 tonnes during Q3, although it moderated from the strong levels recorded in late 2025 and early 2026.

Investment accounted for around 42% of India's net gold demand, down from 69% in the March quarter.

Gold ETF demand rose to 5.3 tonnes from 3.6 tonnes in Q2, taking total holdings to approximately 124 tonnes.

Gold bars and coins vs ETFs vs digital gold

Meanwhile, gross digital gold purchases increased 76% to 16.3 tonnes during January–September 2026, reflecting growing interest in accessible, small-ticket investments.

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Despite the slowdown in physical gold purchases, overall investment demand declined just 4% during the first nine months of 2026, compared with an 18% fall in jewellery consumption.

Looking ahead, the WGC expects investment demand to remain positive during the December quarter, although elevated prices and changing price momentum could continue influencing purchasing decisions.