India's Gold Market Sees Shift from Physical to Financial Demand
Gold demand in India has seen a significant shift in recent times. While jewellery purchases and physical gold have been under pressure, investment demand through gold exchange-traded funds (ETFs) has surged.
The decline in imports is attributed to the rise in domestic gold prices, which have fallen by about 8% over the past month, providing some relief to consumers. However, prices remain elevated and continue to weigh on discretionary jewellery purchases.
Wedding-related demand has remained relatively resilient, but festive-season demand has been cautious due to sharp price movements. The global picture is supportive, with gold ETFs recording $17.8 billion of inflows in August, taking third-quarter 2026 gold ETF demand to 144.7 tonnes.
Kotak Institutional Equities suggests that lower imports could reflect weaker household purchases after the May 13 import-duty increase or a shift towards unofficial channels. This means falling import numbers may not provide a complete picture of household gold demand.