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Informist, Wednesday, Sept. 17, 2025

 

MUMBAI – Gold demand in India is expected to rise between October and December due to wedding and festival-related buying and sustained investment interest, according to Kavita Chacko, research head (India) at the World Gold Council. Demand for gold could also receive a boost from increased consumer spending after the forthcoming reduction in Goods and Services Tax in the country. However, higher prices and any renewed surge may curb overall demand, Chacko said. 

 

There are signs of a pickup in demand for gold in India with the onset of the festive season, led by a surge in physical investment demand for bars and coins, Chacko said, citing market reports and anecdotal evidence from trade channels. Investment interest for gold is reportedly outpacing jewellery purchases, as consumers are drawn in by the renewed uptrend in prices and expectations of further increases.

 

"Conversations with jewellery manufacturers and retailers suggest that jewellery demand, while present, remains uneven. High-value, wedding-related purchases have begun and are holding steady, while high prices have dampened lower-ticket daily-wear and discretionary buying, prompting a shift to lower carat products," Chacko said. While large retailers are reporting higher footfalls, supported by aggressive marketing and promotional campaigns, smaller retailers, in contrast, continue to face muted demand, Chacko added. "Overall, expectations for a strong festive season are building across the gold trade."

 

In late August, gold prices saw a sharp upswing, which accelerated the rally through the first half of September to fresh all-time highs, pushing year-to-date gains to 40%, Chacko said. International gold prices rose 4% in August and 6.7% in early September as bullish sentiment deepened. The rise in gold prices in August was due to a weak dollar, elevated geopolitical tensions, and strong inflows into global gold exchange traded funds.

 

"The continued momentum in September was supported by positive investor positioning – evidenced by rising future net longs and sustained ETF (exchange traded funds) inflows," Chacko said. "Lower US Treasury yields, amid growing expectations of a Fed rate cut and concerns around the Fed's independence, have provided additional tailwinds," Chacko added.

 

In India, gold prices tracked global trends, with a weaker rupee, which boosted the rise in domestic prices, Chacko said. As of mid-September, gold prices rose 7.0% on month-to-date as of Monday to INR 106,863 per 10 grams and increased 44% year-to-date. "Notably, signs of demand interest have helped narrow domestic price discounts, which briefly flipped to a marginal premium in late August and again in mid-September," Chacko said. "This marks a noteworthy change, as domestic gold prices had been trading at a near-sustained discount since December."

 

In August, Indian gold exchange traded funds saw a notable surge in inflows, marking the fourth consecutive month of positive growth. Cumulative net inflows were at INR 21.9 billion, up 74% on month, aligning closely to the World Gold Council's earlier estimates, Chacko said. The increase in inflows was driven by sustained demand for safe-haven assets by investors seeking stability due to weak domestic equities and rising global and geopolitical risks, Chacko said.

 

The total assets under management in gold exchange traded funds rose to a record high of INR 724 billion, with holdings increasing by 2.1 tonnes to 70 tonnes. Investor participation also saw a significant rise, with 164,000 new accounts added, pushing the total number of active accounts to 8.03 million, a 24% increase since the start of the year.

 

The Reserve Bank of India maintains a pause on gold purchases, with no additions for the second straight month in August, Chacko said. "Gold was bought in only three of the first eight months of the year, compared with near-consistent monthly additions through 2024," Chacko said. The scale of buying has declined sharply, with cumulative purchases at 3.8 tonnes this year till August, against 45.4 tonnes in the same period last year. 

 

However, India's gold reserves have climbed to a record of 880 tonnes, with volumes up a modest 4% on year and holdings rising nearly 40% on higher gold prices. Gold accounted for 12.5% of India's foreign exchange reserves as of end-August, up 9% from a year earlier.

 

In August, gold imports rose sharply, reaching a nine-month high and making a second consecutive month high of imports, underscoring resilient domestic demand, Chacko said. Imports in August totalled $5.2 billion, a 37% on-month increase, reflecting seasonal buying interest despite a rise in prices. Import volumes were estimated at 60 tonnes to 65 tonnes, up from 46 tonnes in July, Chacko said.  End

 

US$1 = INR 87.81

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Reshma Ravi and Ashutosh Pati

Edited by Avishek Dutta

 

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