India, the second-largest gold market in the world, after China, is still grappling with the mixed challenges of rising gold prices and subdued demand. Gold Touch As gold prices skyrocket, millions of Indians are rethinking their love affair with this precious metal. Once seen solely as a decorative ornament and ultimate store of value, gold is fast becoming an asset class for financial reinvention. Seventy-seven percent of Indian households own land, while eighty-seven percent own some form of gold. That long-running romance remains strong, particularly in rural regions with fewer resources where gold can be valued as a muggy shot of economic security.
Gold has an especially important cultural significance in India. Its true worth lies hidden within the organizational culture. Even during times of economic distress, a large segment of the Indian population will choose to buy gold. An even more dramatic stat is that more than 75 percent of households in the bottom income quintile have some form of gold ownership. This further underscores gold’s importance not just for the wealthy, but for everyone. In India, the rural sector strongly drives the demand for gold. Shockingly, nearly two-thirds of this demand comes from outside metropolitan areas.
Yet despite this cultural affinity for gold, consumers are becoming less interested in gold as a function of how drastically prices have risen. That trend continued in November, when gold imports plummeted 73 percent month-on-month and 59 percent year-on-year. This steep decline is due to the easing of demand after the festivities. As of September this year, India’s gold imports have already reached about 580 tonnes. This funding level is a 20 percent reduction from appropriated levels in 2024 at this time.
“The preference towards investment-focused buying is reflected in the volume of gold imports, which rose sharply to 340 tonnes between July and October, compared with 204 tonnes between January and June, underscoring the resilience of investment-led demand.” – World Gold Council
As gold prices keep increasing, they become headwinds for jewelry demand at the same time they increase the interest in investment. Indian retail gold investment jumped 13 percent compared to a year ago. It was able to boast that it hit an incredible high of 198 tonnes during the first three builds in 2025. On a more positive note, full-year bar and coin demand is on pace to be the strongest since 2013.
Finally, investment products such as sustainable finance are booming. This wave is evident in the unprecedented growth of Indian investor inflows into gold exchange-traded funds (ETFs). Between January and November of this year, a stunning 3.4 million new accounts were opened. In just November, Indian ETF gold holdings grew almost 3 tonnes, taking cumulative ETF holdings above 86.4 tonnes.
The overall market is in a tough spot, as price volatility limits discretionary spending. Even if strength in the luxury segment surrounds the home, it’s not enough to subdue volume weakness across the remainder of this housing market.
“Although demand in the luxury segment remains strong, it is insufficient to offset the broader volume weakness. Price volatility is further constraining discretionary and everyday jewelry purchases.” – World Gold Council
Cautiously optimistic Meanwhile, analysts at Metals Focus strike a more positive note. As bad as demand may be, they argue, it won’t be as steep a drop-off as we can expect in 2025. And for ever-increasing disasters, they think people will get used to paying more as the economy rebounds.
The story behind India’s gold market dynamics is much more about shifting trends in consumer behavior, investment strategies and the broader economic environment. As prices rise and purchasing patterns evolve, stakeholders must adapt to maintain relevance and meet the changing needs of consumers.