Consumer gold demand in India shifts as jewellery falls to 425 tonnes

Consumer gold demand in India shifted toward investment products in fiscal year (FY) 2026, when jewellery demand fell to 425 tonnes from 549 tonnes in FY25 as record-high prices reduced affordability. Gold bars and coins nevertheless rose to 296 tonnes from 243 tonnes, limiting the decline in total demand to 721 tonnes from 792 tonnes.

Why did gold demand shift away from jewellery in FY26?

Gold demand shifted because record-high gold prices constrained jewellery affordability and discretionary purchases, while bars and coins remained sought as a store of value amid market volatility and economic uncertainty. Jewellery consumption declined by 124 tonnes, or 22.6%, from 549 tonnes in FY25 to 425 tonnes in FY26, exceeding the 71-tonne fall in total consumer gold demand.

Jewellery remained the larger category in FY26 at 425 tonnes, compared with 296 tonnes for bars and coins. However, calculations from the reported data show jewellery accounted for about 59% of FY26’s 721-tonne total, down from about 69% of FY25’s 792 tonnes. The bars-and-coins share consequently increased from about 31% to 41%, indicating a change in the composition of gold purchases as well as a fall in overall volume.

The FY26 result differed from FY25, when total gold demand reached the review-period high of 792 tonnes. FY25 bars-and-coins demand was 243 tonnes and jewellery demand was 549 tonnes despite elevated prices, supported by festive and wedding-related purchases and investor interest in gold as a hedge against inflation and global uncertainty. In FY26, the source identifies affordability as the factor that prevented those jewellery-demand supports from offsetting record prices.

How large was the divergence between jewellery and investment demand?

Gold demand showed a 177-tonne gap between FY26 jewellery demand of 425 tonnes and bars-and-coins demand of 296 tonnes, narrower than the 306-tonne gap in FY25. The 53-tonne increase in bars and coins offset about 43% of the 124-tonne decline in jewellery, which is why total demand declined by 71 tonnes rather than by the full jewellery reduction.

The FY26 jewellery decline followed a multi-year recovery and then moderation in physical buying. Jewellery demand increased by 210 tonnes from 369 tonnes in FY21 to 579 tonnes in FY22, reached 585 tonnes in FY23, and was 579 tonnes in FY24 before declining to 549 tonnes in FY25. The fall to 425 tonnes in FY26 therefore took jewellery demand below the FY22-FY25 range.

Bars and coins moved in the opposite direction after FY23. Demand in the category rose from 167 tonnes in FY23 to 194 tonnes in FY24, 243 tonnes in FY25 and 296 tonnes in FY26, a cumulative increase of 129 tonnes. Total FY26 gold demand of 721 tonnes still remained below 773 tonnes in FY24 and 792 tonnes in FY25 because the increase in investment-oriented products did not fully replace lower jewellery consumption.

What does lower jewellery volume mean for retail market value?

Gold demand shows that retail value can increase even as physical jewellery consumption falls, because higher bullion prices raise the value of each transaction. The Indian gems and jewellery retail market was estimated at Rs 12,88,700 crore in FY26, compared with Rs 8,28,300 crore in FY25, while the source states that FY26 demand decreased and gold-price gains supported value growth.

The retail-market measure is broader than gold jewellery tonnes: it includes jewellery made of gold, diamond, silver, platinum and other precious stones, alongside gold bars and coins. It also includes making charges in product prices. The market rose from Rs 5,03,500 crore in FY22 to Rs 12,88,700 crore in FY26, representing a compound annual growth rate (CAGR) of 20.7%, but that value measure does not establish growth in jewellery weight during FY26.

Gold jewellery nevertheless remained the dominant retail category, with an estimated 80% to 85% market share in FY26. Studded jewellery, defined as diamond, coloured-gem and gemstone jewellery, held 11% to 16%, while other jewellery accounted for 2% to 4%. Gold jewellery’s FY26 range was below its 82% to 87% range in FY19, whereas studded jewellery increased from a 10% to 15% FY19 range.

High-value bridal and investment-led purchases continue to be mainly store-led, where trust, physical verification and personalised consultation are material. Online retail is increasingly used for product discovery, design comparison, price transparency and smaller-ticket purchases, including lightweight daily-wear jewellery. This channel distinction matters in FY26 because record prices affected large discretionary jewellery purchases while investment demand for bars and coins rose by 53 tonnes.

What could sustain or reverse the FY26 gold demand mix?

Gold demand could remain more tilted toward bars and coins if high prices, market volatility and economic uncertainty continue to support gold’s role as a store of value. FY26 depended on that combination: record-high prices affected jewellery affordability, while bars-and-coins consumption increased to 296 tonnes, its highest reported level in the FY19-FY26 series.

A reversal would require conditions that improve jewellery affordability or reinforce occasion-led purchases. The source identifies weddings, festivals, births, harvest-related occasions and other auspicious events as structural drivers of jewellery demand, alongside disposable income and consumer sentiment. FY25 showed that these factors could support 549 tonnes of jewellery demand despite elevated prices, but FY26 showed they were insufficient to counter record prices.

Policy and currency movements have also influenced domestic pricing. In FY23, the Government increased gold import duty to 12.5% from 7.5%, while the rupee depreciated by around 8% against the US dollar; the source links both developments to higher domestic gold prices and moderated gold demand. Geopolitical events and macroeconomic factors can also affect gold prices, leaving the durability of the FY26 mix dependent on price levels and household purchasing capacity.

Manufacturers use forwards, futures and gold-leasing agreements to manage gold-price exposure, while business-to-business suppliers may offer metal-on-loan, consignment and structured-credit arrangements to retailers. These mechanisms can reduce input-cost uncertainty or working-capital requirements, but they do not change consumer affordability. In FY26, the reported 124-tonne decline in jewellery demand demonstrates the difference between trade financing mechanisms and end-market purchasing power.

Conclusion

Gold demand in FY26 separated gold’s wearable and investment functions more clearly than in FY25. Jewellery fell from 549 tonnes to 425 tonnes, while bars and coins increased from 243 tonnes to 296 tonnes, leaving total demand at 721 tonnes. Meanwhile, the broader retail market reached Rs 12,88,700 crore because higher gold prices lifted transaction values despite lower physical demand.

The next measure to watch is whether prices and uncertainty continue to favour bars and coins, or whether wedding, festival and affordability conditions restore jewellery volumes. Crisil Intelligence projects the gems and jewellery retail market at Rs 15,10,000 crore to Rs 15,50,000 crore by FY30, implying a 4.5% CAGR from FY26, but the disclosed value projection does not specify future gold-demand tonnes or the jewellery-to-investment split.