Mumbai, India – November 18, 2025 – Despite gold prices soaring to unprecedented levels, Indian consumers continue to demonstrate an unyielding affinity for the precious metal, presenting a fascinating paradox in the global financial markets. While traditional jewelry demand by volume has seen a notable decline, overall gold imports into the nation have surged, propelled by robust seasonal festivities and a burgeoning investment appetite. This dual dynamic carries significant implications, not only for India's trade balance and domestic economy but also for the global gold market and the public companies operating within it.
The current landscape sees 24-karat gold trading in India at approximately ₹1,20,000 to ₹1,32,780 per 10 grams in spot markets, mirroring international prices that have surpassed the $4,000 per ounce mark. This remarkable ascent, representing a 66% year-to-date increase domestically and 58% internationally by October 2025, is fueled by a confluence of global uncertainties, expectations of US interest rate cuts, a weaker US dollar, and a depreciating Indian rupee. The resilience of Indian gold demand amidst such prohibitive pricing underscores deep-rooted cultural and economic factors that continue to position gold as an indispensable asset in the subcontinent.
The Unfolding Narrative: A Deep Dive into India's Gold Market Dynamics
The current gold market in India, as of late 2025, is a testament to both the metal's enduring appeal and the adaptive nature of consumer behavior in the face of economic shifts. Gold prices have seen an unprecedented ascent throughout the year, with 24-karat gold hitting an all-time high of approximately ₹1,23,080 per 10 grams in October, and even briefly touching ₹110,666 per 10 grams in September. Globally, prices have hovered near $4,000 per ounce, even surging past $4,380 per ounce in October. This meteoric rise, a staggering 46% increase in Q3 2025 compared to the previous year, has fundamentally reshaped the landscape of gold consumption.
While the sheer value of gold purchased has skyrocketed, the volume tells a more nuanced story. India's total gold demand in Q3 2025 saw a 16% year-on-year drop in volume to 209.4 tonnes. This decline was predominantly driven by a significant 31% reduction in traditional jewelry demand by volume, which fell to 117.7 tonnes. However, this dip was partially offset by a robust surge in investment demand, with purchases of gold coins and bars increasing by 20% in volume to 91.6 tonnes. This indicates a clear shift: while ceremonial and ornamental purchases are becoming more considered, gold's role as a strategic asset and inflation hedge is gaining prominence among Indian investors. Despite the volume contraction, the total value of gold purchased in Q3 2025 soared by 23% to an astounding ₹2,03,240 crore, underscoring the impact of price appreciation.
The timeline leading to this current market scenario is marked by consistent upward price pressure and evolving policy responses. Late 2024 saw gold prices begin their significant climb, a trend reinforced by a crucial policy change in the Union Budget 2024-25, which halved the customs duty on gold from 15% to 6%. Throughout 2025, despite initial projections of a decline, prices consistently set new records. By March, gold had crossed the US$3,000/oz threshold, with the Indian domestic landed price reaching INR88,946/10g. Festive seasons like Akshaya Tritiya in April, despite a five-year price increase of ₹54,572, still witnessed resilient demand, particularly in Southern India, with jewelers adapting by offering lighter jewelry. August and September saw gold imports rebound significantly, culminating in an extraordinary threefold surge in October 2025 to $14.7 billion, largely driven by the festive and wedding season, and a reduction in the Goods and Services Tax (GST) rate. This surge, while addressing pent-up demand, also contributed to India's record trade deficit of $41.7 billion.
Key stakeholders in this dynamic market include millions of Indian households, who, rooted in cultural traditions, remain the primary consumers. Jewelers like Titan Company Limited (NSE: TITAN) (through its Tanishq brand), Kalyan Jewellers (NSE: KALYANJWL), Malabar Gold & Diamonds, Rajesh Exports (NSE: RAJESHEXPO), and Tribhovandas Bhimji Zaveri Ltd (TBZ) (NSE: TBZ) are at the forefront of retail, constantly adapting their strategies. The World Gold Council (WGC) provides critical market intelligence, while the Government of India (through the Ministry of Commerce and Directorate General of Foreign Trade) and the Reserve Bank of India (RBI) play crucial roles in policy, trade management, and strategic gold reserves. The RBI, for instance, has seen gold constitute 12.5% of India's foreign exchange reserves by end-August 2025, up from 9% a year earlier. Initial market reactions have seen consumers strategically shifting to lighter-weight or lower-purity jewelry and increasingly embracing gold as an investment. Retailers are innovating with new collections and discounts, while the government grapples with the implications of surging imports on the trade deficit.
Corporate Fortunes: Who Wins and Who Loses in the Gold Rush
The sustained surge in gold prices and the evolving patterns of Indian gold demand have created a distinctly bifurcated landscape for public companies, carving out clear winners and posing significant challenges for others, particularly within the financial services and jewelry retail sectors.
On one side, Gold Loan Non-Banking Financial Companies (NBFCs) are emerging as clear beneficiaries. Companies like Muthoot Finance Ltd. (NSE: MUTHOOTFIN) and Manappuram Finance Ltd. (NSE: MANAPPURAM) thrive in an environment of elevated gold prices. The higher value of gold collateral allows these NBFCs to extend larger loan amounts against the same quantity of gold, directly boosting their Assets Under Management (AUM) and loan disbursements. This also inherently reduces the risk of default, as the collateral's value appreciates, enhancing asset quality and overall profitability. Muthoot Finance, for instance, has seen its stock surge, reporting robust AUM growth and substantial profit increases, leading to an upgraded gold loan growth guidance for FY2026. Manappuram Finance has similarly benefited, with its stock gaining significantly as higher gold prices enable applicants to borrow more. These companies are well-positioned to capitalize on the sustained demand for gold loans, especially from segments with limited access to unsecured credit, further solidifying their financial strength.
Conversely, the impact on Indian Jewelry Retailers is far more complex and often presents a "double-edged sword." While higher gold prices can theoretically inflate revenue in value terms and offer inventory gains if gold was procured at lower rates, they primarily suppress consumer demand for physical jewelry, particularly in price-sensitive markets. Consumers are increasingly postponing discretionary purchases, opting for lighter designs, lower-carat gold (e.g., 18-karat or 14-karat), or shifting towards diamond jewelry. The rise in "old gold exchange" — where customers trade in existing gold for new pieces — further reduces fresh sales volumes. This dynamic increases working capital requirements and finance costs for jewelers, making inventory management a challenging endeavor.
Major players like Titan Company Ltd. (NSE: TITAN), India's largest branded jewelry maker (with brands like Tanishq and CaratLane), face a mixed bag. While its strong brand equity and diversified portfolio help mitigate some challenges, particularly in the sub-₹50,000 price range where consumer sentiment is most affected, high gold prices have increased its finance costs. Titan has strategically responded by introducing more affordable options and leveraging comprehensive hedging strategies. However, other prominent jewelers have felt a more pronounced pinch. Kalyan Jewellers India Ltd. (NSE: KALYANKJIL) and Senco Gold Ltd. (NSE: SENCO) have seen their stock prices decline significantly, despite efforts to expand and report strong revenue growth in value terms. These companies operate in markets where price sensitivity is higher, and the shift in consumer buying patterns directly impacts their sales volumes. Rajesh Exports Ltd. (NSE: RAJESHEXPO) has been particularly hard hit, experiencing a substantial decline in its stock price due compounded by reduced consumer demand and higher manufacturing costs. Similarly, PC Jeweller Ltd. (NSE: PCJEWELLER) continues to navigate a challenging environment, despite showing signs of activity. Newer entrants or those with specialized models, such as Sky Gold Limited (NSE: SKYGOLD), focusing on lightweight jewelry, or Bluestone Jewellery and Lifestyle Pvt. Ltd. (NSE: BLS) with its digital-led approach, might find niches to thrive, but the overall landscape for traditional jewelers remains arduous, requiring constant adaptation and innovation to maintain profitability and market share.
Beyond the Sparkle: Wider Implications and Market Undercurrents
The persistent demand for gold in India, even as prices scale unprecedented heights, resonates far beyond individual consumer choices, sending ripple effects across global industry trends, national economic indicators, and regulatory frameworks. This phenomenon underscores gold's enduring role as a safe-haven asset, a cultural touchstone, and an inflation hedge in an increasingly uncertain world.
Globally, India's gold appetite in late 2025 reinforces the broader trend of gold's growing appeal amidst geopolitical tensions, inflation concerns, and financial market volatility. With international prices surpassing $4,000 per ounce and domestic prices hitting ₹128,395 per 10 grams by October, gold has cemented its position as a strategic investment. While the World Gold Council (WGC) projects a slight moderation in India's overall gold consumption volume for 2025, the robust investment demand, including for Gold Exchange Traded Funds (ETFs) and digital gold, highlights a sophisticated shift in how Indians view the metal. This aligns with a global trend where central banks, including the Reserve Bank of India (RBI), are actively diversifying their reserves, with the RBI's gold holdings reaching a record 880.2 metric tons by September 2025, increasing gold's share in India's foreign exchange reserves to 14%. This strategic accumulation mirrors a broader de-dollarization trend driven by geopolitical fragmentation.
The ripple effects of this persistent demand are significant. The substantial price difference between international and domestic gold, exacerbated by import duties (currently 6% import tax + 3% local sales tax), has made gold smuggling exceptionally lucrative. Smuggling margins, potentially exceeding ₹1.15 million per kilogram, bypass the 9% tax burden, creating an uneven playing field for legitimate traders and leading to considerable revenue losses for the government. Furthermore, the surge in gold imports, tripling year-on-year to a record $14.72 billion in October 2025, has significantly widened India's merchandise trade deficit to an all-time high of $41.68 billion. This puts immense pressure on the Indian Rupee, raises inflation concerns, and necessitates careful recalibration for the domestic economy. For partners, particularly international gold suppliers, India remains a crucial market, but the fluctuating import policies introduce an element of uncertainty.
In response, regulatory bodies are actively engaged. The Indian government and the RBI are continuously evaluating their gold policies. Despite a customs duty cut in July 2024, the resurgence in smuggling and its impact on the trade deficit might prompt a reconsideration, with speculation of potential duty increases in late 2025. The RBI has also introduced new guidelines for gold loans in 2025, aiming to enhance transparency and security, with stricter caps on Loan-to-Value (LTV) ratios and limits on pledged gold. While these measures aim to protect consumers and improve asset quality, they also introduce compliance costs for NBFCs. The discontinuation of the Gold Monetisation Scheme (GMS) in March 2025, alongside the success of Sovereign Gold Bonds (SGBs) that have led to significant capital losses for the government due to soaring redemption values, underscores the challenges in managing physical gold demand. There's a growing call from institutions like the State Bank of India (SBI) for a comprehensive national gold policy to define gold's role and localize the gold economy, potentially through gold-backed pension schemes and stronger recycling infrastructure.
Historically, India's relationship with gold is deeply embedded in its cultural and economic fabric. Gold has always been a symbol of wealth, a hedge against inflation, and a crucial component of financial security, particularly in rural areas. The current price rally, with gold gaining nearly 70% in less than three years (2023-2025), is extraordinary, surpassing previous surges seen during events like the COVID-19 pandemic. A striking difference in late 2025 is the reluctance of Indians to sell their gold holdings despite record prices, reflecting a widespread belief in continued price appreciation and gold's long-term value as an inflation hedge. This cultural resilience, where auspicious occasions like Dhanteras and Diwali consistently drive demand regardless of price, highlights the unique interplay between tradition and market forces that defines India's gold economy.
The Golden Horizon: What Comes Next for India's Market
The trajectory of Indian gold demand, particularly against the backdrop of record-high prices, is poised for a dynamic evolution, necessitating strategic pivots from all stakeholders. With 24K gold reaching ₹127,900 per 10 grams in November 2025 and projections hinting at ₹150,000 by 2026, the market is navigating a significant transformation from traditional ornamental purchases to a more investment-centric approach.
In the short term (late 2025 to early 2026), physical jewelry sales are expected to face continued headwinds. While the festive and wedding seasons may offer temporary boosts, overall physical demand by volume is anticipated to decline by 10-15%. However, the sheer increase in price will likely ensure that demand in value terms remains significantly higher. This period will be characterized by persistently high gold prices, driven by global geopolitical tensions and anticipated interest rate cuts by major central banks. For jewelers, this means a continued focus on lighter, lower-carat designs, modular pieces, and robust old gold exchange programs to cater to budget-conscious consumers. The growth of digital gold, gold coins, and Gold Exchange Traded Funds (ETFs) will continue to attract a digitally-savvy demographic seeking liquidity and transparency.
Looking further ahead into the long term (beyond 2026), the outlook suggests a sustained and structural shift towards gold as a financial asset. Predictions indicate gold prices could breach ₹150,000 per 10 grams by 2026 and potentially range between ₹140,000 and ₹225,000 per 10 grams by 2030. This bullish trend is underpinned by ongoing global uncertainties, consistent central bank buying, and a depreciating Indian Rupee. The cultural significance of gold in India is not diminishing but evolving, with its financial utility increasingly taking center stage. Strategic adaptations will include jewelers designing for investment value and versatility, while the government may increasingly utilize platforms like the Indian International Bullion Exchange (IIBX) for unified imports and explore strategic mining partnerships to reduce import dependency. The burgeoning gold loan market, projected to reach ₹15 trillion by FY26, will also continue to thrive, monetizing household gold holdings.
Market opportunities will emerge from the "financialization of gold," creating avenues for fintech companies and asset managers to offer innovative gold-backed investment products. The growth of the recycling economy, turning old gold into new, presents a sustainable path to reduce import costs. Furthermore, the rising demand for silver, driven by its industrial applications in green energy technologies, could also offer diversification for precious metal investors. However, challenges persist, including dampened physical demand for traditional jewelry, which strains traditional jewelers, particularly in price-sensitive rural markets. Retailers will continue to grapple with inventory risks and profitability concerns amidst volatile prices. Moreover, the sustained high gold imports, driven by enduring demand, will continue to contribute to India's merchandise trade deficit, putting pressure on the Rupee and potentially leading to more stringent import restrictions. The delicate balance between cultural attachment and financial pragmatism will define the future of India's golden obsession.
The Enduring Allure: A Comprehensive Wrap-up
The Indian gold market in late 2025 stands at a pivotal juncture, showcasing an intriguing blend of unwavering cultural reverence and pragmatic economic adaptation. Despite gold prices soaring to unprecedented levels—local prices nearing ₹97,000 per 10 grams in Q3 2025 and global prices hovering around $4,000 per ounce—India's demand for the precious metal remains robust, albeit with a significant shift in its composition.
The key takeaway is a pronounced financialization of gold in India. While the volume of traditional jewelry demand saw a notable 31% decline in Q3 2025, investment demand for gold in forms like bars, coins, and ETFs surged by 20% in volume and a massive 74% in value. This indicates a fundamental shift in consumer mindset, where gold is increasingly viewed as a strategic safe-haven asset and a hedge against global economic uncertainty, geopolitical tensions, and inflationary pressures, rather than solely an ornamental or ceremonial purchase. The World Gold Council projects India's total gold demand for 2025 to be between 600 and 700 metric tons, a five-year low in volume, yet the value of transactions continues to escalate.
Moving forward, the market is expected to solidify this investment-centric trend. Analysts anticipate international gold prices could test $5,000 per ounce by 2026, further reinforcing gold's appeal. The resilience of wedding-related and festive demand will continue to provide a baseline for jewelry sales, but consumers will persistently favor lighter-weight and lower-carat pieces to manage costs. The impact of global monetary policy, particularly anticipated interest rate cuts by the US Federal Reserve, will likely enhance gold's attractiveness as a non-yielding asset. However, the burgeoning trade deficit, exacerbated by record gold imports (a near 200% surge in October 2025 contributing to an unprecedented $41.68 billion deficit), poses a significant macroeconomic challenge, putting pressure on the Indian Rupee and potentially prompting the government to reconsider import duties.
The lasting impact of this period will be a more sophisticated and diversified Indian gold market. The rise of Gold ETFs and digital gold signifies a broader investor base and a greater acceptance of non-physical gold. Gold's role as a primary saving instrument, especially in rural areas, will endure, but with a heightened emphasis on its investment attributes. The industry, particularly jewelers, will need to continue innovating, focusing on adaptive designs, recycling initiatives, and promoting financial gold products to cater to evolving consumer preferences and affordability constraints. This transformation ensures gold's enduring significance in India, albeit in a fundamentally reshaped form.
Investors should closely watch several critical factors in the coming months. The US Federal Reserve's monetary policy regarding interest rate cuts will be a primary driver of global gold prices. The global geopolitical landscape will continue to fuel safe-haven demand. Domestically, Indian government policies, especially regarding gold import duties (with the Union Budget for 2026 being a key event), will directly influence prices and demand. Fluctuations in the Rupee-Dollar exchange rate, the Reserve Bank of India's (RBI) gold buying patterns, and inflation trends (both global and domestic) will also provide crucial insights. Finally, monitoring trade deficit data and the resilience of domestic demand during key festive and wedding seasons will offer a holistic view of the market's health and future direction.
This content is intended for informational purposes only and is not financial advice