India Gold Demand Turns Cautious Ahead of Festive and Wedding Season

India’s gold market is entering the peak festive and wedding period with cautious optimism after August’s sharp price rally gave way to a September pullback. Jewellery demand has softened, domestic discounts have widened and imports have slowed, while ETF, digital-gold and physical investment demand remain comparatively resilient, according to the World Gold Council.

By Paul Ploumis
Published September 21, 2026

MONTREAL (Scrap Monster): India’s gold market is entering the key festive and wedding buying period with investment demand holding up better than jewellery consumption after a volatile swing in prices, according to the latest World Gold Council market update.

Gold prices surged in August before retreating in early September. The LBMA Gold Price PM rose 13% during August to US$4,386 per ounce, while India’s domestic gold price climbed 12% to INR158,854 per 10 grams.

By September 11, international prices had pulled back 3.9% from the end of August, while domestic prices were down 4.6%.

Domestic Gold Discount Widens to US$78 an Ounce

India’s domestic gold market continued to trade below import parity, indicating that local supply remained adequate relative to demand.

The average discount widened from US$34 per ounce in July to US$51 in August, before reaching US$78 per ounce by September 11. At that level, domestic prices were trading nearly 2% below the landed cost of imported gold.

World Gold Council market feedback indicates that exchanges of old jewellery for new pieces have increased local gold availability and helped keep domestic prices below import parity. The availability of unofficial supply was also cited as a contributing factor.

The distinction is important: old gold exchanged for new jewellery should not automatically be treated as recycled gold sold back into the market for cash.

Jewellery Demand Softens, Wedding Buying Holds Up Better

The sharp August price rally followed by September’s pullback has made consumers more cautious.

WGC said overall jewellery demand has softened in recent weeks as buyers delay discretionary purchases and wait for greater price stability.

Wedding-related demand has been comparatively resilient, although retailers are seeing a shift toward lighter-weight jewellery as consumers adjust to elevated prices.

Retailers have also become more conservative with inventory, replenishing stocks in response to actual sales rather than building aggressively ahead of the season.

Large jewellery retailers have generally seen stronger demand than smaller operators and have responded with new product launches, promotions and a greater focus on faster-moving items.

ETF Inflows Rise 67% in August

Investment demand remained a stronger part of the Indian gold market.

Indian gold ETFs attracted INR25.97 billion, or about US$272 million, in August, up 67% month over month, according to Association of Mutual Funds of India data cited by WGC.

ETF holdings increased by 1.6 tonnes to 121.3 tonnes, while total assets under management rose to approximately INR1.912 trillion.

The pace of new investor additions slowed, however. Only about 4,000 new folios were added during August, taking the total to 12.54 million. That compares with an average monthly increase of roughly 330,000 accounts between January and July.

The pattern suggests existing investors continued to add gold exposure even as the rate of new investor entry weakened.

Digital Gold Buying Remains Firm

Digital gold demand also remained steady through the summer.

Purchases averaged approximately INR25 billion per month from June through August, equivalent to around 1.6 tonnes per month.

August digital gold purchases were 110% higher year over year, according to WGC.

The Council linked the continued adoption of digital gold to its fractional purchase model, ease of access and suitability for regular accumulation.

Gold Futures Activity Reaches Five-Month High

Trading activity on India’s Multi Commodity Exchange also strengthened during August.

Average daily gold futures turnover rose 38% month over month to INR295 billion, or about US$3.1 billion, the highest level in five months.

Average daily trading volume increased 27% to approximately 19 tonnes.

Despite that improvement, both turnover and volume remained well below the January peak.

Gold Imports Fall Sharply in August

India’s gold imports moved in the opposite direction.

Import value fell to US$2.3 billion in August, down 45% month over month and 58% year over year.

WGC estimated gross import volumes at approximately 15–20 tonnes.

Gold’s share of India’s total merchandise imports fell to about 3%, compared with 9% a year earlier.

The lower import requirement was consistent with the large domestic discount: when local gold trades materially below import parity, importing additional bullion becomes less attractive.

Investment Demand Is Holding Up Better Than Jewellery

The clearest divide in India’s gold market is between discretionary jewellery demand and investment demand.

High prices and volatility are limiting jewellery purchases, particularly outside weddings and other necessary occasion-related buying. Investment demand, by contrast, has remained comparatively steady across physical gold, ETFs and digital channels.

WGC also noted some evidence of investors shifting from physical gold toward digital forms of exposure.

Market Read

India’s gold market is not showing a broad demand recovery yet. Instead, demand is becoming increasingly selective.

High prices are limiting jewellery volumes, but wedding-related buying remains more resilient than discretionary purchases. At the same time, ETF and digital-gold demand continue to show that investment appetite has not disappeared.

The widening domestic discount and sharp reduction in imports indicate that available local supply is currently sufficient relative to physical demand. That reduces the need for fresh bullion imports even as the festive and wedding season approaches.

The next phase of the market will therefore depend heavily on price stability. A more orderly gold market could encourage delayed jewellery purchases, while another sharp price increase could keep consumers cautious and reinforce the preference for investment products and lighter-weight jewellery.

Outlook: Festive Demand Could Improve, but Price Remains the Constraint

The World Gold Council expects demand to improve as the festive and wedding season progresses.

Steady investment demand and relatively resilient wedding purchases should provide support, but elevated prices and continued volatility remain the principal constraints on discretionary jewellery buying.

The outlook is therefore one of cautious improvement rather than a broad-based demand surge.