India Spends Rs 81,890 Crore on Gold Bars and Coins Despite 40% Demand Crash

The Quick Take

• Indian investors spent Rs 81,890 crore on gold bars and coins in September quarter
• Overall gold demand fell 40% YoY, suggesting jewellery purchases drove most of the decline
• Gold bar and coin investment remained relatively robust versus the jewellery category
• China's gold investment appetite comparison highlights India's unique demand dynamics

Despite a 40% year-on-year decline in overall gold demand in the September quarter, India's investment community deployed Rs 81,890 crore into gold bars and coins — a figure that illustrates the resilience of the investment-grade gold segment even as jewellery and retail consumption pulled back sharply. The divergence between total demand decline and investment-category resilience suggests that the demand crash was concentrated in discretionary jewellery purchases, which are more sensitive to price levels, while the savings-oriented gold bar and coin category held firmer. This pattern mirrors international behaviour during gold price spikes, where high prices deter fashion jewellery but do not proportionally deter investors seeking inflation hedges.

India and China are the world's two largest gold consumers, and the article's comparison of their demand dynamics offers a useful frame for global gold market positioning. India's gold demand tends to be more price-sensitive in the jewellery category but relatively price-inelastic in the investment category, as gold bar purchases are driven by savings behaviour deeply embedded in cultural practice. World Gold Council data showing the September quarter performance suggests that at current price levels, Indian consumers are still willing to convert savings into physical gold even as they defer discretionary jewellery purchases — a signal that underlying demand support is structural rather than cyclical.

Investors in gold royalty and streaming companies should note that India's investment-grade gold demand remaining robust even at elevated prices provides a floor for physical gold demand globally. The key macro variable for India's gold appetite is the trajectory of domestic real interest rates: when bank deposits offer strong real returns, gold competes unfavourably as a savings vehicle, but in periods of negative or low real rates, physical gold regains its appeal. Watch the RBI's rate cycle and India's CPI trajectory through Q4 2026 as the demand context for the Dhanteras-Diwali festive-season purchases.

Synthesized from 1 source.