India's gold demand at a 5-year low: What's the reason?
What's the story
India's gold consumption is expected to fall to a five-year low in 2025, according to the World Gold Council (WGC). The decline is mainly due to record-high prices impacting jewelry purchases. WGC's Indian operations CEO Sachin Jain told Reuters that gold demand might be between 600 metric tons and 700 metric tons in 2025, down from last year's 802.8 tons.
Market dynamics
Price stabilization key for demand recovery
Jain said if prices stabilize, demand could reach 700 tons. However, a 10-15% price rise due to geopolitical factors could bring it down to the lower end of this range. Local gold prices hit a record high of ₹101,078 per 10g in June, and have risen 28% so far in 2025 after a 21% gain in 2024.
Consumption patterns
Gold consumption trends in India
In the April-to-June quarter, India's gold consumption fell 10% year-on-year to 134.9 tons. This was driven by a 17% drop in jewelry demand, even as investment demand rose by 7%. For the September quarter, Jain expects demand to be lower than last year's figure of 248.3 tons due to New Delhi's decision to cut import duties boosting purchases last year.
Investment trends
Gold ETFs gaining popularity
Despite the challenges in the jewelry market, gold has been outshining other asset classes. This has drawn investors toward both physical gold and gold exchange-traded funds (ETFs). Jain noted, "Gold ETFs in India are at a very important cusp for growth, and as India becomes more digitized, they are gaining popularity and prominence."