Indians spend ₹2.42 lakh crore on gold despite 29% crash in demand: What's driving the paradox?

India's gold demand plunged 29% in the July–September quarter of 2026, but consumers spent more money on the precious metal than a year earlier. With domestic gold prices rising 45%, Indians are purchasing smaller quantities while continuing to allocate substantial sums to jewellery and investment gold.

India's gold consumption declined to 162.5 tonnes in the third quarter of 2026 from 229.8 tonnes a year earlier, according to the World Gold Council's (WGC) latest Gold Demand Trends report released on Tuesday. However, the value of demand increased 3% to ₹2,41,900 crore from ₹2,35,090 crore in the corresponding quarter last year.

Why are Indians spending more despite buying less gold?

The divergence is largely explained by soaring gold prices. Average domestic prices climbed 45% year-on-year to ₹1,48,891 per 10 grams during the quarter, compared with ₹1,02,287 in Q3 2025.

International gold prices also increased 23% to an average of $4,262 per ounce from $3,457 a year earlier. Rupee weakness and higher import duties contributed to the sharper increase in domestic prices.

Consequently, households spent more despite purchasing significantly smaller quantities.

"The July-September quarter 2026 reflected the continued resilience of gold demand in India, even as elevated prices influenced consumer purchasing behaviour," WGC Regional CEO, India, Sachin Jain, told PTI.

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He said consumers continued prioritising gold while adjusting purchases to balance affordability and long-term value.

Jewellery demand falls, but spending rises 16%

The impact was particularly visible in jewellery purchases. Demand declined 20% to 99.9 tonnes from 125 tonnes a year earlier, while spending increased 16% to ₹1,48,700 crore.

Jain said softer prices towards the end of September encouraged some deferred purchases, while wedding and festive buying supported demand, particularly in southern India.

Consumers are also increasingly opting for lighter jewellery and exchange programmes to manage higher prices.

A WGC–Kantar survey found that 77% of respondents considering changes to their buying behaviour were willing to compromise on gold purity or carat. Meanwhile, 76% considered exchanging old jewellery to finance new purchases.

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Investment demand also takes a hit

Demand for gold bars and coins plunged 40% to 55 tonnes from 91.6 tonnes a year earlier. Gold ETF demand halved to 5.3 tonnes from 10.7 tonnes, although it recovered from 3.6 tonnes in the preceding quarter.

Despite the decline in volumes, investment demand remained relatively resilient compared with jewellery consumption over the first nine months of 2026.

What lies ahead for gold prices and demand?

WGC expects India's full-year gold demand at 625–675 tonnes, supported by festive and wedding purchases.

However, elevated prices could continue restricting consumption.

Meanwhile, Ponmudi R, CEO of Enrich Money, said MCX gold was trading around ₹1,38,980, down 0.86%, with immediate support at ₹1,37,500–₹1,38,300.

He identified resistance at ₹1,40,000–₹1,41,000, warning that a sustained break below support could push prices towards ₹1,34,000–₹1,35,000.

For consumers, the central takeaway remains unchanged: gold's rising value is keeping spending elevated even as affordability forces households to buy less.