India's Gold Supply Hits Six-Year Low As Imports Decline, Says World Gold Council

India's gold supply fell to its lowest level in six years during the April-June quarter as lower imports reduced the amount of fresh gold entering the domestic market, according to the World Gold Council (WGC). The industry body, however, clarified that the decline did not indicate any shortage of gold in the country, as existing inventories and recycled gold were sufficient to meet demand.

Gold supply refers to the total quantity of gold available in the domestic market from all sources during a quarter. It includes imported gold, recycled gold and domestic mine production.

According to the WGC's Gold Demand Trends: India Focus Q2 2026 report dated July 30, India's gold supply stood at 120 tonnes in the second quarter, its lowest level in six years and significantly below the 16-year quarterly average of 234 tonnes.

The biggest contributor to the decline was lower imports. Net bullion imports, the gold brought into India after adjusting for exports, fell to 98 tonnes during the quarter, down 22 per cent from a year ago and 53 per cent from the previous quarter. Since imported gold accounts for the majority of India's gold supply, the decline had a direct impact on overall availability.

The report, "Imports remained relatively firm in April, supported by Akshaya Tritiya demand, before slowing in May and June as the higher import duty took effect."

Despite the fall in supply, the WGC stressed there was no shortage of gold in the market. It said, "Despite the decline, supply remained adequate to meet prevailing demand, supported by elevated industry inventories and the availability of recycled gold." During the quarter, imports accounted for 82 per cent of total supply, recycled gold contributed 16 per cent, and domestic mine production made up the remaining 2 per cent.

The report added that "overall, lower supply reflected softer demand and resultant lower import requirements rather than a shortage of gold in the domestic market."

Gold Demand Softens, Spending Hits Record

India's total gold demand declined to 131 tonnes in the April-June quarter, down 6 per cent year-on-year (y-o-y) and 13 per cent sequentially. However, higher gold prices pushed the value of buying to a record Rs 1.98 lakh crore during the quarter.

The WGC attributed demand trends to multiple factors, saying, "Policy measures, austerity appeal, the mid-May import duty hike and a seasonally inauspicious buying period shaped demand during the quarter."

Prime Minister Narendra Modi made an austerity appeal in May this year, when he urged citizens to postpone non-essential gold buying for a year as part of a broader effort to reduce pressure on India's foreign exchange reserves amid heightened geopolitical tensions and elevated crude oil prices. The appeal, which also encouraged people to conserve fuel, avoid unnecessary foreign travel and cut discretionary spending, was aimed at reducing import-intensive consumption.

In its report, the WGC said that "the Prime Minister's appeal to curb gold purchases" was among the factors that weighed on jewellery demand during the April-June quarter, alongside the mid-May import duty hike and an inauspicious buying period.

Buyers Shift To Lighter Jewellery

Jewellery demand recovered from the previous quarter but remained weaker than last year. Buying rose 14 per cent sequentially to 75 tonnes but fell 15 per cent on a yearly basis, making it the second-lowest April-June quarter since the WGC began tracking quarterly data in 2000.

According to the report, the nearly 60 per cent growth in domestic gold prices over the past year "continued to constrain affordability, accelerating the shift towards lighter-weight, lower-carat and studded jewellery." The WGC also said that "the Prime Minister's appeal to curb gold purchases" was among the factors that weighed on jewellery demand during the April-June quarter, alongside the mid-May import duty hike and an inauspicious buying period.

Retailers also reported a 10-20 per cent increase in customers exchanging old jewellery, with exchange purchases making up as much as 70 per cent of total sales at some stores.

Even though people bought fewer ornaments by weight, the value of jewellery buying rose 34 per cent y-o-y to Rs 1.13 lakh crore. India also remained the world's largest jewellery market, accounting for 27 per cent of global jewellery demand during the quarter.

Investment Demand Moderates

Investment demand, which includes gold bars, coins and exchange-traded funds (ETFs), eased to 54 tonnes after averaging 100 tonnes over the previous three quarters. Although it remained above the long-term quarterly average of 49 tonnes.

The WGC said the slowdown reflected a pause in gold's price rally. "Rising prices fuelled investment demand through 2025 and Q1'26, while the pullback in prices in Q2 tempered fresh buying. Nevertheless, above-average demand points to sustained investment interest."

Gold ETF demand also cooled sharply to 4 tonnes from a record 20 tonnes in the previous quarter. However, inflows returned in June as investors used the price correction to accumulate more gold. H1 2026 ETF demand reached a record 24 tonnes, while total ETF holdings rose to 119 tonnes and assets under management climbed to Rs 1.69 lakh crore.

Gold Loans Continue To Grow

The report also said that more people are using gold as collateral instead of selling jewellery. Outstanding gold loans with banks reached Rs 5.10 lakh crore by the end of May, up 105 per cent y-o-y, while non-banking finance companies’ (NBFCs) gold loan books rose 70 per cent to Rs 3.30 lakh crore.

The WGC said households showed "limited appetite to sell, preferring to monetise their gold holdings rather than liquidate them." It added that gold loans have become the second-largest retail lending segment after housing, as borrowers increasingly seek liquidity without giving up ownership of their jewellery.

Gold Outlook 2026-27

Looking ahead, the WGC expects demand to remain sensitive to price movements. It said wedding and festive buying should support demand during the rest of the year, although high prices could continue to limit jewellery demand. It also warned that a weaker-than-normal monsoon could weigh on rural incomes and temper demand, and another rise in domestic prices or adverse policy measures could also weigh on demand.