India’s gold market recovered sequentially in Q3 but remains well below last year in volume terms. Demand rose 24-25% q/q to 162t, yet stayed 29% lower y/y and 12% lower year-to-date (444t). Value tells a different story: demand rose 3% y/y to INR2,419bn (US$25bn), and is up 38% over nine months to INR6,688bn (US$71bn). Buyers are spending more to acquire less. On the supply side, official imports declined and recycling remained muted, while estimated unofficial inflows increased.

Prices: Domestic gold averaged INR148,891/10g, up 45% y/y on a weak rupee and the higher import duty, while the international price averaged US$4,262/oz (down 5% q/q, up 23% y/y). Domestic prices traded at a record US$43/oz discount to import parity, reflecting unofficial inflows and old-gold supply.

Jewellery: Demand climbed 33% q/q to 100t, helped by late-quarter price softening, weddings and South Indian festivals in August. It remained 20% lower y/y (18% lower year-to-date), partly because key festivals have shifted into Q4 this year.

Investment: Demand eased from last year’s exceptional levels but held up, rising 12% q/q to about 60t. Investment’s share of net demand fell to around 42% from 69% in Q1. Bars and coins rose 9% q/q to 55t but fell 40% y/y; India remains the world’s second-largest bar and coin market (about 21% of global demand). ETF demand improved to 5.3t from 3.6t. Digital gold is expanding (4.9t in Q3, up 76% year-to-date). Mutual funds’ temporary suspension of fresh gold FoF subscriptions in October bears watching, though the ETF impact is likely contained.

RBI: Reserves held steady at about 880.5t, with just 0.3t bought in nine months, signalling a shift from accumulation to maintenance.

Supply: Total supply fell 43% y/y to 136t. Official imports dropped 70% to 64t after May’s duty hike to 15%, while unofficial inflows jumped to about 50t from 3t a year ago. Recycling was muted at 19t (down 12% y/y), suggesting holders are reluctant to sell, possibly expecting higher prices.

Consumer sentiment (WGC-Kantar, Wave 2): Buying intentions strengthened. Those planning to buy more jewellery rose from 20% to 29%, and those planning to cut back fell from 51% to 40%. Purchases are concentrating around weddings and festivals, with more consumers trading down on purity (77%) and exchanging old jewellery (76%). Expectations of further price rises softened (69% to 61%).

Outlook: Seasonal buying should support Q4 demand, though jewellery volumes will likely stay constrained by high prices, and investment demand remains sensitive to price momentum.