India gold market update: Festive shine

Fresh record for gold

Gold continues its extraordinary price rally, having reached 48 all-time highs this year.² Geopolitical tensions, strong investment demand, dollar weakness, financial market risk and expectations of dovish Fed policy lifted international prices by 11.6% in September and by an additional 7.9% in the first two weeks of October, pushing past the US$4,000/oz milestone. Notably, the surge from $3,500 to $4,000 occurred in just 36 days, a stark contrast to the previous $500/oz increments, which took over three years on average. International gold prices have surged by 58% y-t-d, marking the largest increase in 45 years. Domestically, gold prices have mirrored this upward trend, rising 66% y-t-d, with gains further amplified by weakness in the Indian rupee. 

Since mid-September domestic gold prices have been trading at a sustained premium over international prices (Chart 2). As of mid-October the premium has risen to US$25/oz,³ marking the highest level since July 2024 when the customs duty cut boosted the spread. This move is indicative of the domestic demand conditions detailed below.

Record prices fuel festive sales and investment interest

The festive season has begun on a positive note, with market feedback and anecdotal evidence indicating healthy demand for both physical investment products and jewellery. The record rally in the gold price has drawn investor attention and fuelled sustained interest in physical gold. As a result, the share of investment demand within overall domestic gold consumption is on the rise.⁴ Despite the pressure on gold jewellery consumption due to high prices and affordability, there has been a recent sales uptick, predominantly concentrated around wedding-related purchases and aligning with the wedding season. High prices are prompting consumers to opt for lighter-weight, lower-carat pieces, affecting overall retail volumes. While retailers’ revenues may benefit from a boost in jewellery sales, overall volume demand is bound to decline due to affordability constraints from high gold prices.

Retailer feedback highlights varying demand trends across store types. Large chain stores are witnessing a preference for lighter, lower-carat jewellery, while high-end independent stores catering to wedding customers are experiencing strong sales with minimal impact on volume. In contrast, smaller stores are struggling as footfall declines and sales fall. 

Strong quarter for listed jewellers amid gold price surge 

Despite the high base effect – caused by the July 2024 customs duty cut – and the current record-high gold prices (up ~43% y/y), listed jewellery retailers delivered a strong performance in the July-September quarter, with revenue growth ranging from 6.5% to 63%, according to their quarterly business updates.⁵

The early onset of the festive season (September vs. October last year) and strong wedding demand helped to partially offset the impact of last year’s high base. Targeted marketing campaigns, promotional initiatives, and customer-centric purchase schemes – such as old gold exchange offers, lightweight options and curated product launches – further supported consumer momentum. Retailers reported a notable uptick in demand for lighter, lower-carat jewellery as consumers adapted to higher prices. Meanwhile old gold exchange programs remained a significant sales driver across retailers. 

Retail expansion also stayed strong, with leading players adding between five and 34 new stores during the quarter, including franchise and international formats, underscoring the sector's continued shift toward organised retail. Digital and e-commerce channels also saw significant traction, with some retailers reporting a y/y doubling of online revenue. 

These large retailers remain upbeat about the current quarter, which is traditionally the strongest as it is driven by key festivals and peak wedding season demand.  

ETFs: unprecedented inflows  

Mirroring the global trend, Indian gold ETFs witnessed their largest-ever monthly net inflows in September, totalling INR83.6bn (US$947mn), a 282% increase m/m. Gold demand increased by 7.4t, closely aligned with our earlier estimate⁶ and marking the strongest month on record. The sustained and unprecedented gold price rally has captured investor interest, likely fuelling the surge in inflows; persistent safe-haven demand has also contributed. As per AMFI data,⁷ assets under management (AUM) in gold ETFs reached an all-time high of INR901.4bn (US$10.2bn), while cumulative holdings rose to 77.4t, a tenth of which was added in September alone. 

Investor participation surged as well, with a record 629 thousand new accounts (folios) added in September. This took the total number of active folios to 8.66mn, a 33% increase since the start of the year.

Early data through October 10th indicates that this momentum is continuing, with strong net inflows of INR52.81bn(US$589mn) during this period.⁸

Investor profiles reveal notable differences in terms of AUM share and numbers of accounts. As per AMFI, retail investors accounted for 97% of total folios as of end-June 2025 but only 8% of AUM, reflecting their smaller average ticket size. In contrast, corporates and high-net-worth individuals (HNIs) held a much larger share – 61% and 31% of AUM, respectively – indicating significantly higher investment per account. While the corporate share of total folios remained steady at 0.2%, HNIs showed rising participation, with their share of folios increasing from 1.4% in June 2024 to 3% by June 2025. This suggests growing interest in gold ETFs from affluent investors, possibly driven by portfolio diversification strategies. 

Modest addition to RBI reserves 

In September 2025, based on our estimates using the RBI’s weekly data, the central bank added 0.2t to its gold reserves, bringing its total holdings to 880.2t. While the RBI's gold purchases in 2025 have been relatively muted – just 4t were added during the first nine months compared to 50t in the same period last year – the share of gold in India's foreign exchange reserves has increased significantly, rising from 9% to 14% over this period, largely driven by valuation gains from the rising gold price.

Gold imports rise sharply on seasonal and investment demand 

India's gold imports surged to a ten-month high in September. Imports totalled US$9.16bn, marking a 77% m/m increase. The surge reflects seasonal buying ahead of the festival season, supported by robust investment demand. In volume terms, we estimate imports to be in the range of 100-104t, up from 65t in August.

Footnotes:

¹Retail inflation slips to over 8-year low of 1.54% in September, NDTV, 14 October 2015.

²Based on LBMA Gold Price PM as of 15 October 2025.

³As of 14 October 2025.

⁴The share of bar and coin demand in India’s gold consumption (including jewellery and bars & coins) has increased from 29% in Q2’24 to 34% in Q2’25, Gold Demand Trends: Q2 2025, World Gold Council.

⁵Quarterly update – Titan Company, Kalyan Jewellers, PNG Jewellers, PC Jewellers Limited, Senco Gold Limited.

⁶WGC’s preliminary estimate, based on partial data, indicated net fund inflows of US$903mn and demand of 7.3t.

⁷As per the Association of Mutual Funds of India (AMFI) September 2025 report.

⁸Based on World Gold Council’s estimates of fund-wise net inflows from 1st to 10th October.