India’s Gold Market Thrives on Price Surge and Demand

Records and Resilience

The initial six weeks of 2026 represented an extraordinary and volatile period for the gold market in India. Global gold prices achieved twelve new all-time peaks, surpassing the significant threshold of US$5,400 per ounce, before undergoing a pronounced correction toward the conclusion of that timeframe. This dramatic fluctuation underscored the intense dynamics at play within the precious metals sector.

Despite these ups and downs, the Indian gold market demonstrated impressive resilience. Investors and consumers alike navigated the turbulence with strategic approaches, leading to several noteworthy milestones across various segments of the market. Physical demand held firm, while digital and exchange-traded options saw unprecedented activity, reflecting a broadening base of participation.

Gold ETFs Hit Historic Milestones

In January, gold exchange-traded funds (ETFs) in India reached pivotal benchmarks that highlighted shifting investor preferences. These funds recorded their highest-ever inflows, amassing substantial capital as retail and institutional players sought exposure to gold’s upward trajectory. Holdings within these ETFs expanded significantly, marking a new high in the amount of physical gold backing these instruments.

Participation rates also soared, with a larger number of investors entering the market through this accessible vehicle. This surge was propelled by sustained momentum in gold prices, relatively muted performance from domestic equities, and a growing emphasis on portfolio diversification. For the first time, gold ETF inflows eclipsed those of equity funds, signaling a potential paradigm shift in asset allocation strategies among Indian investors.

Digital Gold Purchases Reach New Peaks

Digital gold buying experienced explosive growth, climbing nearly 90% from the previous month to attain record levels. This boom was fueled by the combination of robust price appreciation and the inherent convenience of digital platforms, which allow users to purchase gold in small increments without the need for physical storage or immediate delivery.

The rapid expansion in digital gold underscores increasing retail involvement in the gold investment space. Platforms offering these services have democratized access, attracting a younger demographic comfortable with technology-driven solutions. However, this surge also brings to light the pressing requirement for robust regulatory frameworks to safeguard consumers and ensure market integrity as volumes continue to escalate.

Rising Imports Driven by Investment Demand

Gold imports into India saw a marked increase during this period, predominantly driven by heightened investment demand rather than traditional jewellery fabrication needs. Shipments arrived to meet the demands of both physical bar and coin purchases as well as the backing requirements for expanding ETF holdings. This shift illustrates how investment-oriented buying has become a dominant force in the supply chain.

Market participants closely monitored import figures as a barometer of underlying demand strength. The uptick not only replenished inventories depleted by prior sales but also positioned the market favorably for sustained activity. As prices stabilized post-correction, these imports provided the necessary liquidity to support ongoing transactions across retail and institutional channels.

Consumer Behavior Adapts to Elevated Prices

Consumers in the physical gold segment exhibited adaptive strategies amid the elevated price environment. There was a clear pivot toward investment-grade products such as bars and coins, which offer direct exposure to gold’s value appreciation. Simultaneously, jewellery purchases trended toward staggered buying, where consumers spread out their acquisitions to mitigate the impact of high prices.

Value sales in jewellery rose impressively by 25-30% year-over-year, even as volumes contracted by approximately 20%. This resilience points to unwavering demand fundamentals, particularly as wedding seasons approached, traditionally a peak period for such purchases. Buyers prioritized lighter designs and smaller quantities, maintaining their cultural affinity for gold while optimizing costs.

Price Stability Poised to Unleash Deferred Demand

With gold prices now entering a phase of relative stability following the initial volatility, the market is well-positioned to release pent-up demand that was deferred during the peak pricing frenzy. Households and investors who held back anticipating corrections may now re-enter, bolstering overall consumption levels.

Investment demand is expected to remain robust, underpinned by gold’s role as a trusted store of value amid economic uncertainties. Jewellery sales, supported by seasonal wedding demand, will provide additional uplift. Together, these factors suggest a balanced outlook where price firmness continues to stimulate rather than suppress market activity.

Key Market Drivers and Future Outlook

• Sustained price momentum has encouraged diversification away from equities into gold ETFs.
• Digital platforms are capturing a larger share of retail investment, necessitating regulatory attention.
• Investment demand leads imports, with physical and ETF needs at the forefront.
• Consumer resilience in jewellery, via value growth despite volume dips, signals strong fundamentals.

Looking ahead, the interplay of stable prices, seasonal boosts, and innovative investment channels positions India’s gold market for continued strength. Stakeholders anticipate that this combination will sustain demand across diverse segments, reinforcing gold’s enduring appeal in the world’s largest consumer market for the metal.