Gold's Festive Glow: Unveiling India's Market Trends
A Golden Opportunity?
Amidst a year of extraordinary price rallies, India's gold market is buzzing with activity. From record-breaking prices to surging demand, the festive season has kicked off with a bang. But here's where it gets controversial: can this momentum sustain, especially with the rising gold prices impacting affordability?
Highlights of the Golden Rush
- Gold's price rally intensifies, with domestic premiums climbing.
- The festive season starts strong, driven by investment demand and jewelry sales.
- September witnessed a surge in gold ETF inflows, with the trend continuing into October.
- Listed jewelers report impressive quarterly revenue gains, despite challenges.
- Gold imports hit a 10-month high in August, fueled by seasonal and investment demand.
Looking Ahead: A Golden Future?
Expectations for a robust festive season remain high, with continued demand for investment products and wedding jewelry. Increased disposable income, thanks to GST cuts and low inflation, may further boost gold's appeal. However, the broader jewelry market faces challenges amidst rising gold prices.
A Record-Breaking Rally
Gold's price rally continues unabated, with an astonishing 48 all-time highs this year. Geopolitical tensions, strong investment demand, and a weak dollar have propelled international prices. Notably, the surge from $3,500 to $4,000 occurred in just 36 days, a remarkable feat. International gold prices have soared by 58% year-to-date, the largest increase in 45 years. Domestically, the trend mirrors, with prices rising 66% year-to-date, amplified by the weakening Indian rupee.
Chart 1: Gold's Upward Trajectory
The gold rally persists in international and domestic markets, as depicted in Chart 1.
Domestic Premium: A Sign of Demand
Since mid-September, domestic gold prices have traded at a premium over international prices (Chart 2). As of mid-October, the premium reached $25/oz, the highest since July 2024, indicating strong domestic demand.
Chart 2: Festive Season Premium
The domestic gold price premium has climbed, coinciding with the festive season's commencement.
Festive Sales and Investment Interest
The festive season has begun positively, with market feedback indicating healthy demand for investment products and jewelry. The record gold price rally has attracted investors and fueled sustained interest in physical gold. As a result, investment demand's share in overall domestic gold consumption is rising. However, high prices impact gold jewelry consumption, with consumers opting for lighter-weight, lower-carat pieces.
Retailer feedback varies, with large chain stores witnessing a preference for lighter jewelry, while high-end stores catering to weddings report strong sales. Smaller stores struggle with declining footfall and sales.
Strong Performance by Listed Jewelers
Despite the high base effect and record-high gold prices, listed jewelry retailers delivered impressive results in the July-September quarter. Revenue growth ranged from 6.5% to 63%, according to quarterly updates. The early onset of the festive season and strong wedding demand partially offset the high base effect. Targeted marketing, promotional initiatives, and customer-centric schemes further supported consumer momentum.
Retail expansion remained strong, with leading players adding new stores, including franchise and international formats. Digital and e-commerce channels saw significant traction, with online revenue doubling for some retailers.
These retailers remain optimistic about the current quarter, traditionally the strongest due to festivals and peak wedding season.
ETFs: Unprecedented Inflows
Indian gold ETFs witnessed their largest-ever monthly net inflows in September, totaling INR83.6bn (US$947mn), a 282% increase. Gold demand increased by 7.4t, closely aligned with earlier estimates. The sustained gold price rally and safe-haven demand fueled the surge in inflows. Assets under management (AUM) in gold ETFs reached an all-time high of INR901.4bn (US$10.2bn), with cumulative holdings rising to 77.4t.
Investor participation soared, with a record 629 thousand new accounts added in September. Early data through October indicates continued momentum, with strong net inflows. Investor profiles reveal differences, with retail investors accounting for 97% of folios but only 8% of AUM. Corporates and high-net-worth individuals hold a larger share of AUM, indicating higher investment per account.
Chart 3: Rising ETF Holdings
Indian gold ETF holdings have risen significantly due to record inflows.
Modest Addition to RBI Reserves
In September 2025, the RBI added an estimated 0.2t to its gold reserves, bringing the total to 880.2t. While RBI's gold purchases in 2025 have been muted, the share of gold in India's foreign exchange reserves has increased significantly, driven by valuation gains from the rising gold price.
Sharp Rise in Gold Imports
India's gold imports surged to a ten-month high in September, totaling US$9.16bn, a 77% increase. The surge reflects seasonal buying and robust investment demand. In volume terms, imports are estimated at 100-104t, up from 65t in August.
Chart 4: Steady Import Rise
Gold imports have been steadily increasing, as shown in Chart 4.
Disclaimer
This information is for educational purposes only and does not constitute investment advice. The World Gold Council and its affiliates do not guarantee the accuracy or completeness of any information and accept no liability for any losses or damages arising from its use. Diversification does not guarantee investment returns and carries risks. Past performance is not indicative of future results. The resulting performance of any investment outcomes is hypothetical and may not reflect actual results. Investors should discuss their individual circumstances with investment professionals before making any decisions.
