For most Indian families, buying gold on Dhanteras is an annual tradition. While households are set to buy gold this year too, last year's budget may not be enough to purchse the same amount of the precious metal.
Even as gold price has tumbled nearly 30% from its January peak, it still costs more than from last year's Dhanteras. While international price averaged around $4,262/oz in the July to September quarter, down 5% quarter-on-quarter, but 23% higher in the same period previous year . Domestic prices were firmer, at an average on Rs 1,48,891 per 10 grams, down 1% from the previous quarter and up 45% year-on-year. In October, gold rates have remained rangebound. By mid-October, international gold prices remained broadly stable from end-September, while domestic prices were stood 1% lower, majorly due to gains in the rupee, according to a report by the World Gold Council.
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India's gold market improved from the previous quarter, with growth across all segments. The total demand surged 25% quarter on quarter to 162 trillion, driven by a seasonal jewellery demand. This demand, however has remained 29% lower than the same quarter previous year, suggesting affordability pressures due to higher domestic gold prices.
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During this period, the divergence between volume and value continued. Eventhough tonnage declined sharply, the value of demand rose 3% to Rs 2,419 billion. A similar trend was observed over the first nine months of 2026, when demand fell 12% to 444 trillion, while value rose 38% to Rs 6,688 billion. This reflects that consumers and investors continued to spend and invest on gold even as higher prices resulted in lower quantities purchased.
Additionally, domestic gold price discounts have narrowed sharply in last month, standing on an average of $66/oz in September to $8/oz as of 16 October. The comes amid growing seasonal demand, eventhough the continued discount to import parity indicates adequate domestic supply.
The report estimates that the festive and wedding season will boost demand in the near-term, with lower prices likely to support jewellery spend, however higher prices may continue to limit volume growth.
Seasonal demad to continue
In terms of jewellery, demand has surged due to falling gold prices, which pushed some deferred purchases. This was supported by wedding and festive buying, especially in South India from August to September. However, demand was 20% lower year-on-year as higher prices continued to weigh on affordability.
The latest pullback in gold prices has given some support to demand. According to World Gold Council, manufacturers have so far reported healthy order flows as retailers stock up inventories to meet demand, while store footfall has improved.
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