Indian gold investors are showing less confidence in near-term price increases even as investment demand recovers, pointing to a changing pattern in how the country buys and holds the precious metal ahead of Diwali.

The World Gold Council’s Q3 2026 report shows that the share of Indian respondents expecting gold prices to rise over the next three months declined from 69% to 61% between survey waves. However, the majority still anticipate further gains, suggesting that interest in gold remains intact despite the recent price correction.

The shift in sentiment comes as domestic gold prices have fallen approximately 20% from their January peak of ₹1.80 lakh per 10 grams to around ₹1.42 lakh per 10 grams. The decline has brought prices to comparatively lower levels ahead of Dhanteras, one of the busiest gold-buying occasions in India.

Gold investment demand recovers despite weaker sentiment

Despite the decline in price optimism, India’s gold investment demand increased 12% quarter-on-quarter to 60 tonnes in Q3 2026.

The recovery was supported by purchases of gold exchange-traded funds (ETFs), along with bars and coins. However, the distribution of demand indicates that investors are increasingly considering financial products instead of relying entirely on physical gold.

Gold ETF demand increased to 5.3 tonnes in Q3 from 3.6 tonnes in the previous quarter. September also recorded inflows worth ₹4,451 crore, the highest monthly intake of the financial year.

In contrast, demand for physical bars and coins declined 40% year-on-year. High gold prices and concerns around storage have contributed to the changing preference among investors.

Gold ETFs offer exposure to gold prices without requiring investors to purchase, store or secure physical metal. They also allow fractional investments and provide liquidity without the making charges associated with jewellery.

Gold correction brings buyers back ahead of Dhanteras

The decline in domestic gold prices could also influence festive-season purchases. With rates falling from January’s record levels, consumers may find it easier to make jewellery purchases during the upcoming Dhanteras and Diwali period.

Jewellers expect sales volumes to increase by 10–12% year-on-year, supported by comparatively lower prices and seasonal demand.

The correction has been linked to expectations of higher US interest rates, a stronger dollar and profit booking after gold’s earlier rally. These factors have weighed on prices despite continued geopolitical uncertainty and central bank buying.

However, the lower rates do not necessarily indicate a lasting decline in gold’s investment appeal. For many investors, the recent movement has created an opportunity to reconsider their purchase timing.

Experts advise staggered gold investments

Dr Renisha Chainani, Chief Research Officer at Augmont, said the price correction should not be viewed as a reason to abandon gold as an investment.

She highlighted that movements in the dollar, interest-rate expectations and profit booking often influence short-term gold prices, but do not change the metal’s role in protecting portfolios against inflation, currency weakness and market uncertainty.

Chainani recommended spreading purchases over several weeks through systematic investment plans (SIPs) in gold ETFs or digital gold rather than investing a lump sum during periods of volatility.

She also suggested maintaining a 15–20% allocation to gold in an investment portfolio, depending on individual investment goals.

The advice reflects a broader distinction between short-term price expectations and long-term portfolio allocation. While investors may be less certain about immediate gains, gold continues to attract interest as a diversification option.

US interest rates and geopolitical developments remain key factors

Gold’s next price movement will depend on several external factors, including US monetary policy, bond yields, dollar movements and geopolitical developments.

Expectations of higher interest rates and a stronger dollar could continue to put pressure on prices. On the other hand, changes in monetary policy expectations, geopolitical uncertainty and continued central bank purchases could provide support.

Diwali and the wedding season may offer additional support to domestic jewellery demand in the near term. However, the growing preference for ETFs and changes in physical jewellery purchases suggest that India’s gold market is also undergoing a shift in investment behaviour.

The latest trends point to two developments taking place simultaneously: consumers are getting some relief from lower physical gold prices, while investors are increasingly turning to financial products to gain exposure to the metal.

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