Despite a significant 40% year-on-year decline in volume, Indian investors poured a substantial ₹81,890 crore into gold bars and coins during the third quarter of 2026. This highlights the enduring appeal of gold investment in India, even as the nation retains its position as the world's second-largest market for physical gold, trailing only China.
India's Gold Demand Trends in Q3 2026
According to the World Gold Council (WGC), India's demand for gold bars and coins dropped to 55 tonnes in the July-September 2026 quarter, a sharp fall from 91.6 tonnes in the same period a year prior. However, this represents a 9% sequential recovery from the 50.3 tonnes purchased in the preceding June quarter. In value terms, the decline was less steep, falling 13% from ₹93,740 crore in Q3 2025, largely due to a 45% surge in average domestic gold prices, which reached ₹1,48,891 per 10 grams.
India vs. China: A Global Comparison
China maintained its lead as the largest global market for gold bars and coins in Q3 2026, with an approximate demand of 80 tonnes. India, at 55 tonnes, accounted for around 21% of global bar and coin demand. While India saw a sequential increase in demand, China's purchases experienced a decline from approximately 108 tonnes in Q2 2026, indicating differing market dynamics.
Why Indians Continue to Invest in Gold
Physical gold, particularly bars and coins, remains a preferred investment channel for many Indians. It is viewed as a reliable asset for long-term wealth preservation and a hedge against economic uncertainties and inflation. Unlike gold jewelry, which often carries cultural significance, bars and coins are primarily acquired for their investment value, despite considerations like premiums, storage costs, and resale spreads.
Factors Influencing Gold Purchases
The annual contraction in demand can be attributed to several factors. A high base from 2025 and a moderation in investment buying as earlier price momentum faded played a role. Furthermore, a nine-percentage-point increase in gold import duty in May 2026 significantly impacted demand. WGC analysis suggests that bar and coin purchases are particularly sensitive to changes in import duties and income levels.
Emergence of Alternative Gold Investments
While physical gold demand saw a dip, overall gold investment demand increased 12% sequentially to about 60 tonnes in Q3 2026. This indicates a potential shift towards alternative forms of gold investment. Gold Exchange Traded Funds (ETFs) saw a rise in demand to 5.3 tonnes from 3.6 tonnes in Q2, bringing total holdings to approximately 124 tonnes. Digital gold also gained traction, with gross purchases increasing 76% during January–September 2026, reflecting growing interest in accessible, small-ticket investments.
Looking ahead, the WGC anticipates positive investment demand for gold in the December quarter, though elevated prices and evolving price momentum are expected to continue influencing purchasing decisions across the Indian market.