The World Gold Council , in its latest report authored by Kavita Chacko, Research Head, India, said that India’s gold market is showing early signs of recovery following a sharp decline in gold prices in June. Although overall consumer demand remains subdued, gold-backed exchange-traded funds (ETFs) and digital gold purchases have gained momentum, while gold imports fell to their lowest level in a year due to ample domestic supply and softer demand.
According to the report, both international and domestic gold prices came under significant pressure during June. International gold prices fell by more than 11% to around US$4,000 per ounce, their lowest level since October, while domestic prices declined by about 10% to approximately INR141,000 per 10 grams, marking a six-month low.
Although prices have recovered modestly in July, international gold remains nearly 7% lower year-to-date, while domestic gold prices are still around 6% higher than at the beginning of 2026, supported by the Indian government's 9% increase in import duties introduced in May and the depreciation of the Indian rupee against the US dollar.
The WGC attributed the decline in gold prices primarily to the strengthening US dollar, growing expectations of further US interest rate hikes, and investors rotating capital into Western equity markets. At the same time, lower prices created an attractive buying opportunity for investors who had been waiting for a market correction, helping to cushion further declines.
Ample Domestic Supply Keeps Local Prices at a Discount
The report noted that discounts in India's domestic gold market have narrowed considerably compared with the elevated levels seen immediately after the import duty hike in May, indicating a gradual normalization of market conditions.
During the first half of July, domestic gold traded at an average discount of around US$20 per ounce to the landed import price, compared with a peak discount of nearly US$150 per ounce in May. Domestic prices briefly approached parity with imported gold prices in late June and early July before discounts widened again to approximately US$40 per ounce by mid-July.
According to the WGC, the continued discount reflects abundant domestic supply relative to demand, particularly as increasing volumes of old gold are being exchanged for new jewellery, providing an additional source of supply and reducing the need for fresh imports.
Jewellery Demand Improves While Investment Products Lose Momentum
The report said consumer demand has started to recover gradually after a slowdown that lasted from mid-May to mid-June, driven by seasonal weakness, government policy measures, and Prime Minister Narendra Modi's appeal to limit gold purchases.
Although overall demand remains below normal levels, industry participants reported stronger consumer activity in recent weeks, led primarily by jewellery purchases.
Retailers' promotional campaigns—including discounts, exchange programs, and flexible payment plans—have also supported sales. Demand has not been confined to wedding-related purchases, as manufacturers have already begun receiving advance orders from retailers in preparation for the festive season beginning in August.
In contrast, demand for gold bars and coins has weakened, as investors typically favor these products during periods of rising rather than falling prices.
Old Gold Exchanges Continue to Rise
The WGC highlighted that exchanges of old gold jewellery for new pieces have continued to increase following the import duty hike in May.
Retailers reported that exchange volumes rose by an additional 10% to 20%, with some indicating that exchanged gold now accounts for as much as 70% of total jewellery sales. This trend has significantly increased domestic gold supply while reducing reliance on imported bullion.
Listed Jewellery Retailers Deliver Strong Quarterly Results
Despite a traditionally less favorable buying period, India's leading listed jewellery retailers reported strong financial performance during the April-June quarter.
According to the report, revenues increased by between 30% and 60% year-on-year, supported by regional festivals, the summer wedding season, and Akshaya Tritiya, one of India's most important gold-buying festivals.
Retailers also reported growth in both customer numbers and average transaction values. Old gold exchanges accounted for approximately 43% to 55% of total sales during the quarter, supported by promotional campaigns.
Meanwhile, major jewellery chains continued expanding their retail networks by opening between 8 and 33 new stores each during the quarter, reflecting confidence in the medium-term outlook for jewellery demand.
Gold ETFs Benefit from Price Decline
The report showed that Indian gold-backed exchange-traded funds (ETFs) experienced a strong rebound in June, bucking the global trend of ETF outflows.
Net inflows reached INR34.4 billion (US$356 million), the highest monthly level since February, while total holdings increased by 2.2 tonnes to reach 119 tonnes.
Although assets under management declined by about 8% because of lower gold prices, investors viewed the market correction as an attractive buying opportunity.
Positive inflows continued during the first ten days of July, totaling an estimated INR12.1 billion (US$127 million). Investor participation also broadened, with 135,000 new accounts added during the month, bringing the total number of ETF accounts to 12.5 million.
Digital Gold Purchases Continue to Grow
The WGC also reported that digital gold purchases through India's Unified Payments Interface (UPI) recovered strongly in June after slowing in May.
The value of transactions increased by 4% month-on-month to INR25.5 billion (US$269 million), while estimated purchase volumes rose by 9% to approximately 1.7 tonnes.
According to the report, these levels remained above the average recorded over the previous 17 months, demonstrating continued resilience in digital gold demand as an increasingly popular investment channel among Indian investors.
Gold Imports Fall to a One-Year Low
India's gold imports declined for the second consecutive month in June, falling to approximately US$1.97 billion, down 42% from May and marking the lowest monthly level since June 2025.
Nevertheless, import values remained 7% higher year-on-year, reflecting significantly higher average gold prices compared with last year.
The report estimates that import volumes ranged between 16 and 22 tonnes in June, compared with 29 tonnes in May and 25 tonnes in June 2025.
According to the WGC, the decline in imports reflects weaker domestic demand, elevated inventories across the supply chain, and increased recycled gold supply resulting from old jewellery exchanges, reducing the need for fresh imports.
As a result, gold's share of India's total merchandise imports declined to just 3% in June, compared with approximately 17% in January, highlighting the significant shift in the country's gold market during the first half of 2026.
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