(Kitco News) – India’s seasonal gold demand is picking up, as recent price declines are helping support jewelry demand and ETF inflows, while gold futures activity and import volumes declined in September, according to Kavita Chacko, Research Head for India at the World Gold Council (WGC).
In the latest WGC India update published Tuesday, Chacko wrote that gold prices have been steady in October following the sharp 8.5% drop in September.
“[H]igher US Treasury yields, a stronger dollar and reduced futures positioning weighed on prices, despite strength in global ETF inflows,” she said. “Domestic prices fell by a more modest 4.8% to INR147,613/10g, with weakness in the INR cushioning some of the decline in international prices.”
“Prices have remained rangebound in October,” Chacko added. “At mid-month, international gold prices were broadly stable from end-September, while domestic prices were around 1% lower, partly due to gains in the INR.”
Domestic price discounts for gold also narrowed sharply in October, dropping from an average of $66 per ounce in September to only $8 as of October 16. “The narrowing reflects improving seasonal demand, although the continued discount to import parity indicates adequate domestic supply, with industry feedback citing old-gold supply and unofficial inflows as contributing factors,” she said.
And seasonal gold demand is gaining strength as India enters its annual festive and wedding period. “The recent decline in gold prices has provided some support to demand,” Chacko noted. “Manufacturers are reporting healthy order flows as retailers replenish inventories to meet this seasonal demand, while industry feedback points to improving in-store footfall. Alongside increased marketing and promotional activity, jewellers have focused on fresh designs and lighter weight pieces, which offer greater wearability.”
Meanwhile, gold bar and coin demand has moderated as price momentum has eased, lowering the pace of investment-related buying seen during the earlier price rally.
“Listed jewellery retailers reported strong double-digit revenue growth in the range of 20-30% y/y in the Jul-Sep quarter, suggestive of resilient consumer demand despite elevated and volatile gold prices during the quarter and a less favourable festive calendar,” she said. “The performance was particularly noteworthy as key festivals that supported sales in the same period last year shifted to the Oct-Dec quarter this year.”
Chacko said the growth in jewelry demand was driven by strong same-store sales and continued network expansion. “Demand during the quarter benefitted from wedding-related buying, festive purchases, growing consumer preference for lightweight jewellery, brand-led promotional activity and strong growth in e-commerce channels,” she said. “The growth profile indicates that value growth continued to outpace volume growth. Buyer growth remained in the mid-single digits, while average ticket sizes increased by double digits, reflecting the combined impact of higher gold prices and ongoing premiumisation.”
“Old-gold exchange transactions remained an important source of demand, rising by more than 10% y/y and accounting for over 50% of sales for some retailers,” she added. “In contrast, investment-led coin demand reportedly moderated from a strong base.”
Indian gold ETFs also saw an uptick in net inflows in September in line with the global trend. “According to data from the Association of Mutual Funds in India (AMFI), net inflows rose to INR44.5bn (US$466.2mn), the highest in seven months,” Chacko wrote. “Nearly 3t was added to holdings during the month, taking cumulative holdings to 124t. The pickup in inflows suggest that investors viewed the September price decline as an opportunity to add gold as a strategic asset and portfolio diversifier.”
But despite higher inflows, total assets under management declined by 2.5% from August to September to $19.5 billion, mostly due to the 7% drop in domestic gold prices during the month. “Gold ETFs accounted for 2.25% of overall mutual fund AUM, marginally below 2.27% in January’26.”
Investor participation in gold ETFs also picked up. “Gold ETFs added 140,231 new folios (accounts) during September, a marked increase from around 4,000 in August, taking the total number of folios to 12.68mn,” she said. “This increase suggests that the price pullback encouraged broader investor participation, highlighting continued interest in gold as a long-term portfolio allocation.”
“Inflows continued into October, with an estimated INR17.22bn (US$ 181mn) of net inflows during the first half of the month, equivalent to around 1.2t,” she added.
Meanwhile, mutual funds which invest in gold ETFs have announced a temporary suspension of new or additional subscriptions into gold savings and Fund of Funds (FoFs) as of October 16, 2026, though the restriction does not apply to existing systematic investment plans (SIPs) or redemption requests.
“While no reason has been provided for the move, it reportedly follows discussions with the Securities and Exchange Board of India (SEBI) and is likely aimed at lowering gold imports,” Chacko said. “This latest move follows the limits placed on large direct subscriptions into gold ETFs and gold FoFs, which occurred in early June.”
Demand for digital gold also rose last month. “Digital gold demand remained firm in September, with purchases rising to INR25.9bn (US$271mn), up 4% from August, 83% higher than a year earlier and 4% above the average monthly purchase value recorded over the previous five months,” she wrote. “Volumes reached 1.7t, 18% above the long-term monthly average since January 2025.”
Purchases totaled 16.3 tonnes to date in 2026, compared with 9.2 tonnes in the same period of 2025, an increase of 76%. “The strength in digital gold suggests that consumers continue to be attracted to this convenient way of investing due to its accessibility, convenience and low minimum investment.”
And futures trading moderated last month but stayed firm overall. “Gold futures trading on the Multi-Commodity Exchange of India (MCX) remained elevated in September, although activity eased from August’s five-month high,” Chacko noted. “Average daily trading volumes moderated 4% m/m to 18.3t, while turnover fell at a faster pace, down 10% m/m to INR265bn (US$2.8bn), reflecting lower gold prices. Despite the moderation, market participation remained healthy, with both volumes and turnover approximately 20% above the April-August averages, suggestive of continued interest for hedging and tactical positioning.”
Imports, meanwhile, continued their decline last month. “Gold imports fell sharply in September to US$1.8bn, the lowest level since March 2024 and down 22% m/m and 81% y/y,” she said. “Gross import volumes are estimated at around 20t, while gold’s share of total merchandise imports fell to 2.4% from 14% a year earlier. This sharp decline, despite the approaching festive season, likely reflects greater availability of domestic supply, including recycled gold generated through old-gold exchange programmes.”
Looking ahead, Chacko said that commentary from jewelry store managers is optimistic about the coming two quarters. “Sales are expected to benefit from new store openings as well as marketing and promotional campaigns,” she said.
The World Gold Council expects the festive and wedding season to provide “a favorable near-term demand backdrop, with lower prices supporting jewellery spend although elevated price levels may continue to limit volume growth.”
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