Joint Report
Gold price surge shifting jewellery demand to investment, says report
This story was originally published at 15:08 IST on 25 March 2026
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NEW DELHI – India's gold market is undergoing a transformation as elevated prices and global uncertainty drive a the sharp shift from jewellery consumption to investment demand, according to a joint report released Wednesday by the Associated Chambers of Commerce and Industry of India and ICRA Ltd.
Global gold jewellery consumption declined 15% in 2024-25 (Apr-Mar) and fell a further 17% year-on-year in the first half of FY26, while investment demand for bars, coins, and ETFs surged 74% in FY25 and another 60% in the first half of FY26, the report said.
India, however, retained its position as the world's largest gold jewellery consumer in FY25, despite a 7% contraction in demand. Domestic jewellery consumption fell sharply by around 26% year-on-year in the first half of FY26 due to record-high prices, although this decline was partly offset by increased investment demand.
Gold prices have seen a sustained rally, rising 30% globally in FY25 and a further 46% year-on-year in the first nine months of FY26. In India, prices rose even faster--up 33% in FY25 and 52% in the first three quarters of FY26--driven by rupee depreciation and strong global trends, the report highlighted.
The report attributed the gold price surge to strong buying by central banks, the geopolitical situation, ETF inflows, and the yellow metal's appeal as a hedge against inflation and economic uncertainty. Central banks have been purchasing over 1,000 tonnes annually in recent years, providing strong underlying support to prices.
On the policy front, the report said that a reduction in India's gold import duty to 6% from 15% in July 2024 temporarily supported demand by lowering prices, although the effect was short-lived as global prices rebounded.
Structurally, India's gold ecosystem is becoming more formalised. Mandatory hallmarking has improved purity assurance and consumer confidence, while organised retailers now account for around 40% of the jewellery market, up from just 5% in 1999-2000 (Apr-Mar).
The report also highlighted the growing financialisation of gold, with gold loans, ETFs, and digital products deepening the metal's integration with the financial system. Meanwhile, recycling and refining are gaining traction, although India continues to rely heavily on imports due to negligible domestic mining.
Despite near-term pressure on jewellery demand due to high prices, the medium-term outlook for India's gold sector remains supported by investment demand, organised retail expansion, and ongoing regulatory reforms, the report added. End
Reported by Pallavi Singhal
Edited by Deepshikha Bhardwaj
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