Global gold jewellery consumption fell sharply in H1 FY2026 due to high prices, while investment demand for gold bars, coins, and ETFs surged amid economic uncertainty, says a joint report by ICRA and Assocham.
Global Market Shift: Jewellery vs. Investment
Global gold jewellery consumption declined sharply in the first half of FY2026 due to elevated prices, while investment demand for gold witnessed a strong surge amid economic uncertainty, according to a joint report by ICRA and Assocham.
The report stated that global gold jewellery consumption, in volume terms, declined by 15 per cent in FY2025 and further by 17 per cent year-on-year in H1 FY2026, primarily due to high gold prices. However, the trend in the gold market has shifted significantly towards investment-led demand. Demand for gold bars, coins and exchange-traded funds (ETFs) surged by 74 per cent in FY2025 and further by 60 per cent in H1 FY2026 on a year-on-year basis.
It stated, "Global gold jewellery consumption, in volume terms, declined sharply.... However, demand for investment products such as bars, coins and exchange-traded funds (ETFs) surged". The report highlighted that persistent economic uncertainty and geopolitical tensions have driven investors towards gold as a safe-haven asset. Additionally, central banks have continued significant gold purchases in recent years to diversify reserves and preserve value, providing strong support to global gold prices.
Impact on India's Gold Sector
It noted that rising gold prices have dampened consumer demand for jewellery globally, but strong investment demand has offset the decline to some extent. In India, the gold sector is undergoing structural changes driven by greater formalisation, regulatory support, technological adoption and deeper financial integration. Despite a contraction in demand, India emerged as the world's largest gold jewellery consumer in FY2025, surpassing China.
However, jewellery demand in India declined by around 7 per cent during FY2025 and saw a sharper fall of around 26 per cent year-on-year in H1 FY2026 due to persistently high prices. The report added that this decline in jewellery demand was partly offset by strong investment demand for gold bars and coins. A reduction in customs duty on gold imports to 6 per cent from 15 per cent in July 2024 provided temporary relief and improved consumer sentiment. However, domestic prices soon rebounded in line with global trends.
Surging Gold Prices: Global and Domestic Trends
Global gold prices have witnessed a sharp rally in recent years, rising by 10 per cent in FY2024, 30 per cent in FY2025, and by 46 per cent in the first nine months of FY2026 on a year-on-year basis.
Domestic gold prices have increased at an even faster pace, rising by 14 per cent in FY2024, 33 per cent in FY2025 and 52 per cent in 9M FY2026, largely due to the depreciation of the Indian rupee against the US dollar.
Future Outlook
So the report stated that while high prices may continue to impact jewellery demand in the near term, strong investment demand, growth in organised retail, expansion of gold loans and supportive policy measures are expected to support the medium-term growth of India's gold sector. (ANI)
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