Indians refuse to cash in on gold in their lockers hoping for a better price

Despite domestic gold prices rising around 45% year-on-year, Indians showed little appetite for selling old jewellery and other gold for cash, with recycled supply falling 12% y/y to 19 tonnes in the September quarter, according to the World Gold Council. The muted response suggests holders are reluctant to part with their gold and may be waiting for prices to rise further, the report said.

Meanwhile, India's gold demand is expected to fall to a six-year low in 2026, as elevated prices weigh on jewellery sales and investment demand moderates.

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The country, the world's biggest gold consumer after China, is grappling with rising living costs in the wake of the Iran war, while a weak monsoon could curtail rural demand for jewellery.

Jewellery demand fell in the first nine months of the year, which will drag down total demand to around 650 metric tons, the lowest since 2020 when the COVID-19 pandemic forced jewellery shops to close, Sachin Jain, chief executive of the WGC's Indian operations.

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Gold demand fell 29% year-on-year to 162.5 metric tons in the September quarter, as jewellery purchases declined 20% and investment demand dropped 40%, Jain said.

Demand is likely to improve in the December quarter as key festivals such as Diwali and the wedding season drive purchases, he said.

Indians celebrated Dussehra in October and will celebrate Diwali in early November, when buying gold is considered auspicious.

But high prices and weakness in the rural economy following a poor monsoon are likely to cap demand, the WGC said in a report published on Tuesday.

More than half of India's gold demand comes from rural areas where jewellery is a traditional store of wealth for millions.

The monsoon delivered its lowest rainfall in more than a decade in 2026, curbing agricultural production and reducing farmers' incomes.

India's gold imports fell in the September quarter, partly due to a rise in unofficial inflows after the government raised import duties on the precious metal earlier this year, Jain said.