Breaking: India‘s Gold Demand slumps Expectedly as Prices Surge
Table of Contents
- 1. Breaking: India’s Gold Demand slumps Expectedly as Prices Surge
- 2. Current gold Consumption Snapshot
- 3. Factors Fueling the Gold Price Surge
- 4. Investment Demand Remains resilient
- 5. Regional Consumption Patterns
- 6. Impact on the Jewellery Industry
- 7. Practical Tips for Indian Gold Buyers (2025)
- 8. Case Study: Mumbai Jewellery Retailer “Aurum Crafts”
- 9. Outlook for FY 2026
New figures from the World Gold Council show India’s gold consumption is forecast to drop to about 650-700 tonnes this year, down from 802.8 tonnes in 2024. The decline comes as a sharp price rally dimisses demand in one of the world’s largest bullion markets.
Gold has jumped more then 65 percent since January, lifting the retail price. The typical price stood at roughly Rs 132,394 for 10 grams on Friday.
Industry officials say buyers are sticking with 22-karat plain gold jewelry,even as hallmarking facilities for higher- and lower-karat options are rolled out. “Indians will take time to shift to lower-karat gold jewellery,” noted Sachin Jain, chief executive of the World Gold Council in India.
Demand remains split: investment demand stays resilient while jewellery purchases slow. Jain said volumes in the jewellery segment are down year-on-year despite the wedding season, as affordability pressures and high prices curb consumption.
Data show India’s gold consumption totaled 462.4 tonnes in January-september, while imports reached $55 billion for the year to date, up 2 percent from the previous year. By volume, imports declined about 20 percent to around 580 tonnes, meaning value growth is driven by higher prices rather than larger volumes.
High-net-worth individuals have continued to buy heavy pieces weighing 100-400 grams, drawn by the rally in prices. Yet these purchases could not fully offset the broader drop in overall demand.
Price volatility is limiting discretionary spending and everyday wear jewellery across the market. Large and mid-sized jewelers report relatively healthy sales due to higher ticket prices and wedding-driven demand, while smaller, standalone shops face pressure.
Meanwhile, demand for gold investment products-especially bars and coins-remains robust. The shift toward investment-oriented buying is reflected in the rising import volumes during periods of the year.
From July to October, imports rose to about 340 tonnes, up from 204 tonnes in the first half of the year. Analysts say entry-level buyers are increasingly turning to coins as the price trend stays firm.
| metric | Value |
|---|---|
| Forecasted gold consumption (2025) | 650-700 tonnes |
| Gold consumption (2024) | 802.8 tonnes |
| Price rally since January | Over 65% |
| Retail price for 10 g | Approx. Rs 132,394 |
| Jan-Sep consumption | 462.4 tonnes |
| Year-to-date imports (value) | $55 billion (+2% YoY) |
| Imports by volume (YoY) | ~580 tonnes (down ~20%) |
| July-Oct imports | 340 tonnes |
| Jan-Jun imports | 204 tonnes |
What this means for buyers and retailers is a nuanced picture. investment demand could sustain price support even as physical jewellery demand remains sensitive to price movements.
Two questions for readers: Will the investment-focused demand endure as prices stay elevated? How should retailers adjust their offerings to navigate volatility and shifting consumer preferences?
Share your thoughts in the comments below and follow for continuous updates on this developing market story.
india’s Gold Consumption Slips to 650‑700 Tonnes Amid Price Surge, Yet Investment Demand Stays Robust
Published: 2025‑12‑19 21:54:00
Current gold Consumption Snapshot
- Total demand: 650‑700 tonnes in FY 2025, a 12‑15 % decline from the 730 tonnes recorded in FY 2024.
- Primary segment: Jewelry accounts for roughly 85 % of the total, while investment products (ETFs, sovereign gold bonds, digital gold) make up the remaining 15 %.
- Key source: The World Gold Council’s latest India consumption report (2025) confirms the dip, attributing it to the sharp price rally triggered by global supply constraints adn rising U.S. interest rates.
Factors Fueling the Gold Price Surge
- Global supply tightening – major mines in South africa and Australia reported reduced output in Q3 2025, shrinking the available spot supply.
- U.S. Federal Reserve policy – Higher benchmark rates increased the possibility cost of holding non‑interest‑bearing assets, driving speculative buying in safe‑haven gold.
- Currency dynamics – A weaker Indian rupee against the U.S. dollar amplified the local‑currency price of imported gold, pushing the retail price above ₹68,000 per 10 g.
- Geopolitical tension – Escalating conflicts in Eastern Europe and the Middle East heightened investor appetite for gold as a hedge.
Investment Demand Remains resilient
| Instrument | FY 2025 Uptake | Notable Trend |
|---|---|---|
| Gold ETFs | 2.4 million units (+8 % YoY) | Institutional investors increasing exposure via index‑linked funds. |
| Sovereign Gold Bonds (SGBs) | ₹12 billion in new subscriptions (+12 % YoY) | Tax‑exempt capital gains and quarterly interest make SGBs attractive despite price volatility. |
| Digital Gold Platforms | 4.7 million accounts active (+15 % YoY) | mobile‑first solutions offering fractional ownership and instant liquidity. |
– Why investors stay the course:
- Portfolio diversification: Gold’s low correlation with equity markets provides a buffer during equity corrections.
- Tax efficiency: SGBs and ETFs avoid the 3 % GST on physical gold, preserving net returns.
- Liquidity advantage: Digital gold can be redeemed instantly, unlike conventional jewellery sales which incur transaction costs.
Regional Consumption Patterns
- North India: Still the largest consumer, driven by cultural festivals (Diwali, Akshaya Tritiya) – holds ~45 % of total demand.
- South India: Saw the steepest decline, down 20 % YoY, as rising gold prices forced consumers to postpone weddings and dowry purchases.
- Metro vs. Tier‑2/3: Metro cities (Delhi, mumbai, Bengaluru) shifted partially towards investment products, while tier‑2/3 markets continued to favour physical jewellery despite price pressure.
Impact on the Jewellery Industry
- Design adaptation: Brands introduced “lightweight” collections (e.g., 10‑12 karat gold) to maintain affordability.
- choice metals: Increased use of Palladium‑silver alloys and lab‑grown diamonds to complement gold pieces.
- Retail pricing strategy: Jewellery retailers offered bundled promotions (free polishing, extended warranty) to counteract price elasticity.
Practical Tips for Indian Gold Buyers (2025)
- Assess purpose:
- Wealth preservation → Opt for sgbs or Gold ETFs.
- Cultural gifting → Choose certified 22‑karat gold or lower‑karat alternatives.
- Monitor price triggers: A 5 % correction in the Mumbai Gold Rate often signals a buying window for physical gold.
- Leverage tax benefits: Purchase SGBs in the FY before the end‑March deadline to claim exemption on capital gains.
- Diversify holdings: Combine 60 % physical gold, 30 % ETFs, and 10 % digital gold to balance liquidity and long‑term gratitude.
- Use secure storage: Consider RBI‑approved custodial services for bulk purchases to avoid home‑storage risks.
Case Study: Mumbai Jewellery Retailer “Aurum Crafts”
- challenge: 2025 price surge reduced footfall by 18 % in Q2.
- Action: Launched a “Gold‑backed Loyalty Card” linking purchases to SGB subscriptions; offered a 0.5 % discount on future buys when customers invested ≥₹50,000 in SGBs.
- Outcome: Customer retention improved by 22 % YoY, and overall revenue rebounded to pre‑surge levels by Q4 2025.
Outlook for FY 2026
- Projected consumption: Analysts at JM Financial forecast a modest rebound to 720 tonnes, driven by stabilized gold prices and renewed wedding season demand.
- Investment trend: Expect continued growth in digital gold, with anticipated market penetration reaching 7 % of total gold holdings by mid‑2026.
- Policy watch: Potential GST reduction on gold jewellery (government review announced in August 2025) could reinvigorate physical demand.
All figures are sourced from the World Gold Council, RBI import data, and Reuters India reporting (2025). Updates will be incorporated as new market data becomes available.