India's Gold Demand Falls 6%, Value Reaches Record High Despite Smuggling Concerns

India's gold demand dropped by 6% in Q2 of 2026 compared to the same period last year, reaching 131.4 tonnes, according to a report from the World Gold Council (WGC). This decline was largely due to reduced sales of jewellery, which is often driven by high prices. However, despite this decrease in physical demand, the total value of gold purchases increased by 50% to a record Rs 1.98 lakh crore.

The WGC report noted that investment interest in gold remained strong throughout the quarter, with many customers viewing it as a safe-haven asset amidst economic and geopolitical uncertainty. However, the high prices of gold, combined with higher import levies and the 3% Goods and Services Tax (GST), led to reduced retail demand.

The report also highlighted that India's net gold imports dropped by 23% year-over-year to 98.1 tonnes in Q2, marking the lowest level since September 2020. The WGC warned that the government's decision to increase the import fee on gold to 15% in May has led to a rise in gold smuggling.