Despite high prices—including record highs in several currencies—Indians still do not want to part with their gold. The precious metal has historically been viewed as a key safe haven. This is particularly the case in rural pockets of India’s hinterland. As gold prices soar, many investors are using gold jewelry for adornment and as a strategy to preserve their wealth for the future.
Gold is currently trading at around ₹111,000 per 10 grams. This represents a remarkable 44 percent gain in rupee terms since the beginning of the year. On average for the year, it made gold prices 21 percent higher than the previous year. This positive upward trend has plenty of investors excited about its continued rise. One private investment research house recently forecasted prices going as high as ₹125,000 per 10 grams in coming months.
Even with these soaring rates, Indian investors are not bowing out. Yet it is domestic consumers who are most acutely experiencing this shift in sentiment. Most recently, few thought that gold prices could go any higher. Gold’s recent success on international markets has contributed to these perceptions. On that note, we’ve witnessed domestic price discounts continuing to narrow over the last month or so.
American investors have been panic-purging their gold. In Q2 of this year, U.S. net investment demand collapsed. Additionally, just 9 tonnes of gold coins and bars were bought—the worst quarterly performance since 2019. The World Gold Council noted that “U.S. net investor demand was again affected by a double whammy of elevated profit taking and subdued levels of new purchases.”
Indeed, global demand for gold bars and coins jumped 11 percent in the first half of this year compared to the same period in 2022. In sharp contrast, demand in the United States collapsed, tanking an astonishing 53 percent year-on-year. This divergence is a great example of how attitudes toward gold differ across India and the U.S. Indian investors are deciding to retain their gold despite increasing prices.
Recent trends paint a picture of rising Indian appetites for gold. In just the month of August, imports reached $5.2 billion, a 37 percent increase from July month-on-month. The record increase in imports is underlining how tight supplies are. Investors Consumer demand For many consumers, gold is becoming the preferred investment vehicle, especially during these tumultuous economic times.
In March, gold prices shot over $3,000 an ounce. Indian investors – who were the first to adopt the app – scurried to divest themselves of their investments and safeguard their profits. This trend seems to have moved back towards retention with the ongoing increase of prices. The World Gold Council remarked on this change, stating, “This marks a noteworthy change, as domestic gold prices had been trading at a near-sustained discount since December.”
The cultural significance of gold in India is a key driver of this action. For many families—particularly in rural households—gold jewelry is not merely a form of adornment. It serves as an essential fiscal backstop. In India and South Asia, families frequently make significant purchases of gold during holidays or life milestones. This practice deepens gold’s association with a coveted, beloved asset.
Amidst volatility in the global gold market, Indian investors appear to be just as bullish about the long-term value of gold. And immediate predictions indicate that prices will continue to increase even more dramatically. As gold remains a hedge against economic uncertainty, with every rational Indian likely to continue possessing their precious metal well into the future.