India's gold jewellery consumption fell sharply by 19% year-on-year to 66.1 tonnes in the first quarter of 2026 due to high domestic gold prices that were 81% higher compared to the same period last year, according to the World Gold Council's Gold Demand Trends report for Q1 2026. In value terms, jewellery demand hit a first-quarter record of $10 billion, underscoring a market that is buying less but spending more.
The volume decline reflects a broad shift in purchasing behaviour. Mass-market consumers cut back on purchases or switched to lighter-weight, lower-carat, and studded jewellery to offset the price impact, while high-income buyers continued purchasing heavier pieces regardless of price. Exchange of old jewellery for new remained a dominant feature of the market during the quarter. Gold-backed borrowing also saw a dramatic rise — outstanding retail bank loans secured against gold jewellery stood at INR 4.3 trillion at end-February, up 124% year-on-year, pointing to gold's deepening role as financial collateral in Indian households.
Where jewellery faltered, investment stepped in. Bar and coin demand in India jumped 34% year-on-year to 62.3 tonnes — the highest first quarter since 2013 — nearly matching jewellery consumption in tonnage terms. This is a significant structural shift in a market where jewellery has historically been a multiple of investment demand. Gold ETF inflows also continued through the quarter, supported by dip-buying as prices corrected in February and March. The WGC noted that some buyers who would ordinarily have purchased jewellery switched to bars and coins, which carry lower premiums.
Global picture
India's experience mirrors a worldwide trend. Global gold jewellery consumption fell 23% year-on-year to 299.7 tonnes — the lowest since the Covid-disrupted Q2 2020 — even as total spend rose 31% to a first-quarter record of $47 billion. Total global demand, including OTC transactions, came in at 1,231 tonnes, up 2% year-on-year, but the combination of modest volume growth and gold's exceptional price run generated a 74% jump in value to a record $193 billion. The LBMA PM gold price averaged $4,873 per ounce for the quarter, after touching an all-time high of $5,405/oz in January.
The story globally was driven overwhelmingly by bar and coin buying, which hit 474 tonnes — the second-highest quarter on record — with value rocketing to an unprecedented US$74 billion against a five-year quarterly average of just $23 billion. China led the surge, with bar and coin demand soaring to a record 207 tonnes, smashing the previous Q2 2013 high of 155 tonnes. Safe-haven buying, weak local equity markets, a depreciating yuan, and China's new VAT treatment of gold jewellery — which redirected investment-motivated buyers towards lower-premium products — all contributed to the explosion in demand.
Jewellery weakness widespread
Beyond India, jewellery demand declined across virtually every major market. China saw a 32% year-on-year fall to 85.2 tonnes, further dragged down by the new VAT regime on jewellery, weak consumer confidence and sluggish income growth — even as spending on gold jewellery rose 16% to $13 billion, reflecting a shift to lighter and smaller pieces. The United States registered one of the sharpest declines, down 44% year-on-year, as tariffs compounded the affordability impact of record gold prices — one of the few markets where even the value of jewellery demand dropped. Middle Eastern markets saw universal double-digit volume declines, though combined value rose 30% to a record US$5 billion, supported by Ramadan and Eid buying before conflict in the region brought some markets close to a standstill.
Central banks continue to hoard
Central bank net purchases remained robust at 244 tonnes, up 3% year-on-year, with Poland's National Bank the largest buyer at 31 tonnes and Uzbekistan adding 25 tonnes. The People's Bank of China added 7 tonnes, taking its total reserves to 2,313 tonnes. Notable selling by Turkey and Russia attracted market attention during the quarter, though the WGC described Turkey's disposals as tactical, with holdings having stabilised by April.
Total gold supply rose 2% to 1,231 tonnes, with mine production reaching a first-quarter record of 884.7 tonnes. Mali, Indonesia and Canada drove the increases. Recycling rose 5% to 366 tonnes globally, with India seeing a sharp 44% quarter-on-quarter jump. Technology demand edged up 1% to 82 tonnes, sustained by AI infrastructure deployment, which drove electronics demand to its highest level since Q4 2021.
The WGC estimates central bank buying will remain stay solid, with a full-year target in the range of 700 to 900 tonnes.