Editor’s Note
This article examines the multifaceted drivers behind gold’s sustained rally, from geopolitical uncertainty fueling investment demand to evolving domestic consumption patterns. Key trends include record ETF inflows, robust jewellery sales, and the rise of digital gold platforms, even as central banks like the RBI adopt a more measured purchasing approach amid high prices.
- Gold rally continues, largely fuelled by global uncertainty
- Domestic demand sustained, backed by investment buying
- Listed jewellers post strong revenue growth in the October-December quarter
- December inflows into Indian gold ETFs are unprecedented; 2025 demand at a historic high
- Digital gold purchase trends higher, reflecting its growing role in the domestic gold market
- RBI slows gold accumulation amid rising valuations; 4t added in 2025
- December gold import bill is up, but remains well below festive-season levels.
Seasonal festival and wedding demand could lend incremental support to jewellery, while investment demand is likely to remain the key driver.
Gold prices have extended their uptrend in 2026, scaling fresh record highs. International gold prices advanced by nearly 6% in the first 13 days of the new year, registering five new all-time highs and breaching the US$4,600/oz mark. This follows a 4.2% rise in December and a strong 67% gain during 2025, the highest annual increase since 1979. Domestic gold prices have closely tracked the global rally, rising to INR139,799/10g. The sustained uptrend has been largely driven by elevated geopolitical tensions, persistent policy uncertainty, and resilient safe-haven demand. In addition, positive momentum, reflected in the continued inflows into global gold ETFs has further underpinned prices.
Market feedback and interactions with trade participants indicate that the domestic gold demand environment remains resilient, though measured.
Elevated gold prices have tempered gold jewellery purchase volumes and average ticket sizes, as consumers adhere to fixed budgets and shift towards lightweight jewellery with lower making charges. While 22k gold jewellery remains the preferred choice, demand for lower purity jewellery, particularly 18k and 14k, has seen an uptick, reflecting heightened price sensitivity. Needs-based wedding purchases remain steady, providing key support to overall jewellery demand. Jewellery exchange activity continues to be robust, highlighting value-conscious consumer behaviour: some retailers report that over 40% of their jewellery sales are driven by old jewellery exchange.
Meanwhile, investment demand remains strong and is reportedly drawing in new buyers who are attracted by the gold price momentum.
Listed jewellery retailers reported strong revenue growth ranging from 37% to 51% y/y in the October–December quarter – supported by festive and wedding demand. Growth, however, was largely price-led: a price rise of more than 15% during the quarter boosted average selling prices and offset the decline in volume. Plain gold jewellery reportedly recorded strong growth and gold coin sales nearly doubled year-on-year, reflecting heightened investment demand amid rising prices. Digital and e-commerce channels also saw a sharp acceleration, with some companies reporting annual revenue growth of over 100%.
Sales momentum reportedly remained resilient, even after the main festive period and despite volatility in gold prices. Aggressive store additions, targeted marketing campaigns, gold exchange and promotional offers, and new design launches supported performance.
Indian gold ETFs ended 2025 on a strong note, with net inflows reaching an all-time high of INR116bn (US$1.29bn) in December, according to data from the Association of Mutual Funds of India. This marked the eighth consecutive month of net additions, underscoring sustained investor demand for gold-backed funds. Cumulative holdings increased by a record 8.6t in December, lifting the total to a historic high of 95t, in line with our estimates. Investor appetite was supported by muted equity market performance and sustained gold price momentum, reinforcing the role of gold ETFs as a preferred portfolio diversifier.
2025 was a standout year for Indian gold ETFs. Net inflows of INR430bn (US$4.9bn) and net demand of 37t were the highest on record, accounting for 5% of global gold ETF flows and demand. Assets under management (AUM) of gold ETFs grew to INR1,279bn (US$14.2bn), increasing India’s share in global gold ETF AUM from 1.9% in 2024 to 2.5% a year later. Within the domestic mutual funds universe, the share of gold ETFs also increased from 0.7% to 1.6%.
The investor base also expanded sharply during the year, with a 60% y/y increase in accounts (folios). At the end of December total folios reached 10.2mn, with 3.8mn new accounts added in 2025, underscoring the growing adoption of gold ETFs among investors.
Purchases of digital gold have trended higher, reflecting its growing role in the domestic gold market.
