India's Gold Demand Shifts Towards Financial Forms Amid High Prices

India's gold demand is changing due to high prices, which have risen 60% in a year. This has led to a decline in jewellery volumes by 15%, but an increase in value of purchases.

The World Gold Council reported a 15% year-on-year decline in Indian jewellery demand in the second quarter of 2026, even as the value of jewellery demand rose 34%. The surge in prices has made traditional heavy jewellery increasingly difficult to afford, pushing buyers towards lighter pieces and old-gold exchanges.

Those looking at gold primarily as an investment are increasingly turning to exchange-traded funds (ETFs), coins, and digital gold. Gold ETFs received net inflows of Rs 1,559 crore in July, before inflows rose 67% month-on-month to Rs 2,597 crore in August.

The shift towards financial forms of gold is becoming increasingly visible, with people wanting the savings side of gold in simpler forms, easier to buy in small amounts, hold and sell. Gold ETFs attracted roughly Rs 41,500 crore between January and August, almost matching the inflows recorded through the whole of the previous year.

The impact of high prices may become more pronounced if they remain elevated for an extended period. India's demand mix is already reflecting that transition, with bar-and-coin demand almost matching jewellery demand in the first quarter of 2026.