The demand for gold has recently decreased in the two biggest physical markets in the world, as both Chinese and Indian consumers have become more circumspect. Many people are staying on the sidelines due to a mix of record-high prices, currency pressures, and changing economic outlooks.
🌮🇳 India: Cultural Demand and Record Prices Conflict
India has a strong cultural bond with gold, but in 2026, price sensitivity hasn’t been overcome by festivals and wedding season.
Price shock: Due to a weak Indian rupee and a strong international spot price, domestic gold prices have been repeatedly reaching all-time highs. As a result, bars and jewels become much more costly in rupees.
Post-festival lull: Demand usually decreases following Akshaya Tritiya’s important buying window in April and May. With many households delaying purchases in the anticipation of a correction, this year’s high price point prolonged that slump.
Transition to financial gold: Sovereign gold bonds (SGBs), digital gold, and gold exchange-traded funds (ETFs) are becoming more popular. Cautious retail investors find these instruments appealing because they provide exposure without requiring actual purchases at high rates.
Import duty watch: In an effort to prevent smuggling and increase the appeal of official imports, the government recently lowered import charges from 15% to 6%. Although this initially encouraged some purchases, the global price increase swiftly offset the gain, making purchasers wary once more.
🇨🌳 China: Economic Challenges Reduce Appetite
In China, the strength of the local currency and the overall economic climate are more important factors than cultural festival cycles.
Property market and stock volatility: Because of the long-term decline in real estate and the unstable equity markets, consumer confidence is still precarious. Many people view gold as a safe haven, but at these high prices, even that story is becoming less appealing since buyers fear they are “buying the top.”
PBOC stops buying: The People’s Bank of China stopped accumulating gold reserves for a few months in 2024 after going on an 18-month buying binge. Since then, it has only made sporadic purchases. This intermittent strategy shows that even the official sector finds the current prices to be demanding.
Yuan devaluation pressure: Gold denominated in dollars becomes considerably more expensive locally due to a declining yuan. The sheer price level now encourages more wait-and-see behavior than panic buying, while this occasionally encourages safe-haven buying.
Jewelry versus investment bars: Due to low wholesale demand, premiums on physical gold in Shanghai have occasionally been low or even negative. Although overall volumes are still modest, demand has shifted away from heavy jewelry and toward lighter, less expensive investment bars and coins.
A Market Awaiting a Dip: A Common Thread
The situation is the same in both countries: consumers are postponing big purchases rather than leaving the market. Although there is a widespread perception that the current run-up is excessive, there is a strong underlying belief in gold as a store of value, particularly in light of geopolitical concerns and inflation uncertainty.
Given the strong cultural and economic ties to gold in both China and India, a significant price correction or stabilization of native currencies would probably quickly attract these cautious buyers back. Expect the cautious attitude to persist until then.
