India's Gold Demand Dives Amid Rising Prices
India's relationship with gold is undergoing significant changes due to rising prices. According to recent data, India's demand for gold dropped by 6% year-over-year in Q2 2026 to 131 tonnes, while spending increased by 35% to ₹1.979 trillion. This shift in consumer buying habits indicates a growing preference for gold monetization over ownership.
Rising gold prices have made household gold an increasingly important source of financial liquidity. Gold now serves three overlapping roles: cultural wealth, an investment asset, and a potential source of liquidity. Investment demand has grown significantly, with Q1 2026 bar and coin demand reaching 62 tonnes, while gold ETF demand reached record levels.
The emergence of gold-backed borrowing as a major credit segment is also noteworthy. According to the World Gold Council's Q2 2026 India analysis, gold-backed lending has become the second-largest retail lending segment after housing. A gold loan provides an alternative between keeping gold at home and selling it, allowing borrowers to access funds without giving up ownership permanently.