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Informist, Friday, Dec. 19, 2025

 

MUMBAI – Even though gold prices are expected to strengthen further in 2026, total demand for the precious metal in India is likely to remain largely steady compared to this year, according to a report titled 'India Focus Monthly' by global precious metal research consultancy Metals Focus. However, there will be a divergence between demand for jewellery and retail investment, with weakness in the former being largely offset by strength in the latter, it said.

 

Softness in gold jewellery consumption in the country is expected to carry into 2026, with full year jewellery demand projected to decline by a further 9%, it said. "This weakness will be mostly price-driven, as domestic gold prices continue to set record highs. Rupee depreciation has further exacerbated the impact of higher dollar prices, weakening by 6.5% ytd (year to date) against the dollar," according to the report. Gold jewellery consumption in India fell sharply by 26% on year to 291 tonnes in the first nine months of this year, and the fourth quarter also seems to be weak, it added.

 

Retail investment, which includes gold bar and coin purchases, has been the stand-out gold demand segment this year. As gold prices are expected to rise further next year, physical investment demand is forecast to grow by 11% in 2026, approaching levels last seen in 2013, according to the report. Retail investment rose by 13% on year to 198 tonnes in the first three quarters of 2025, driven by record prices and bullish expectations, which attracted new investors into the market. Full year investment demand in 2025 is expected to reach its highest level since 2013. Gold's strong price performance has been the key driver, it said.

 

In terms of prices, the research consultancy maintains a bullish outlook for 2026, and expects gold to trade above $5,000 per ounce in the second half of the year. "Further US rate cuts, ongoing de-dollarisation, rising risks of stagflation, additional policy uncertainty, and continued portfolio diversification should support gold prices in reaching new record highs," it said in the report.

 

Meanwhile, high gold prices have accelerated several structural shifts within the jewellery market. First, there is a clear move towards lower caratage products with consumers increasingly opting for 18- and 14-carat jewellery over the traditional 22 carat. "The share of 22k jewellery, which stood at around 85% (in weight terms) a few years ago, has declined to approximately 75% in 2025. This trend has gained further momentum as prices reached record levels," it said. Moreover, the government's approval of 9 carat hallmarking this year has encouraged some, albeit limited growth in this segment, particularly within online channels. Consumers are also becoming more receptive to plain gold designs being produced in 18 carat, especially in northern and eastern India.

 

Second, there has been a sustained move towards lighter-weight jewellery this year and amid elevated gold prices, this trend is expected to become even more pronounced as income growth remains modest, the report said. "Our research indicates that even traditional temple jewellery, which previously weighed around 100g, is now being produced in weights of just 30-40g, allowing consumers to retain design and aesthetics in an affordable manner. This shift will have a significant impact on overall volumes," it said.

 

However, this decline is expected to be less severe next year as consumers gradually adjust to higher prices and economic conditions improve. Additionally, for certain designs, the scope for further "light-weighting" will be limited following reductions already achieved over the past few years.  End

 

US$1 = INR 89.27

 

Reported by Ashutosh Pati

Edited by Ashish Shirke

 

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