India's gold consumption set to hit six-year low as prices surge

India's gold consumption is projected to fall to its lowest level in six years during 2026, driven by a combination of rising bullion prices, inflationary pressures on household budgets, and weather-related headwinds affecting rural purchasing power.

The squeeze on consumer finances has intensified following geopolitical tensions, particularly the Iran conflict, which has added to overall cost-of-living concerns across the nation. Households are increasingly prioritizing essential expenditures over discretionary purchases such as gold jewellery, traditionally a significant component of demand in India.

A weaker-than-expected monsoon season presents an additional challenge, particularly for rural communities whose gold purchases are closely tied to agricultural income. Lower farm output and reduced rural incomes are expected to curtail jewellery buying in villages and smaller towns, where gold holds considerable cultural and economic significance.

India remains the world's second-largest gold consumer after China, with the precious metal deeply embedded in the country's cultural fabric and investment practices. The projected contraction underscores how macroeconomic headwinds and climate factors can significantly impact gold consumption patterns across the region's largest economy.