India gold market update: Investment-led support

Extended price rally

International gold prices extended their sharp rally beyond October, ending November up 4.5% and gaining a further 3.7% to US$4,347/oz by 12 December, taking y-t-d returns to 67%. Domestic gold prices mirrored this trajectory but outperformed, rising 73% y-t-d, aided by a 5.6% depreciation in the INR. Our Gold Return Attribution Model (GRAM) suggests that the rally has been supported by a weakening US dollar, persisting geopolitical tensions, and gold ETF inflows.

Chart 1: Further uptick in gold prices

End of month LBMA Gold Price PM and MCX domestic spot price levels and m/m changes*

Discounts on domestic gold prices have widened significantly, increasing from around US$11/oz at the start of November to nearly US$30/oz as of 12 December (Chart 2), partly reflecting a slowdown in jewellery demand.

Chart 2: Domestic gold prices at a deeper discount

NCDEX gold premium/discount relative to the international price*

Mixed gold demand: volume pressure in jewellery; investment holds the fort

Gold demand in India continues to diverge: sustained strength in investment demand contrasts with weakness in the jewellery segment. Feedback from industry stakeholders, mainly manufacturers and retailers, indicates that gold jewellery volumes are lower y/y, despite the wedding season, as higher prices and affordability weigh on consumption. While value growth remains positive due to higher prices, volumes – particularly in the mid- and small-ticket segments that underpin mass demand – remain pressured. Although demand in the luxury segment remains strong, it is insufficient to offset the broader volume weakness. Price volatility is further constraining discretionary and everyday jewellery purchases.  

This divergence is also evident across the retail landscape. Large and medium-sized jewellers continue to report relatively healthy sales, supported by higher ticket prices and need-based wedding purchases, whereas small and standalone jewellers are under pressure.  

Meanwhile, demand for gold investment products, particularly bars and coins, remains strong. The preference towards investment-focused buying is reflected in the volume of gold imports, which rose sharply to 340t between July and October, compared with 204t between January and June, underscoring the resilience of investment-led demand.

ETFs: inflows moderate but momentum stays firm

Inflows into Indian gold ETFs remained strong in November, although at a slower pace than in the preceding two months. Net inflows totalled INR37.4bn (US$421mn), about half of the previous month but still comfortably above the average monthly inflows of INR27.6bn (US$315mn) during the first 10 months of the year. Gold holdings rose by nearly 3t during the month, taking cumulative holdings to 86.4t,¹ broadly in line with our estimates. The momentum has carried into December, with net inflows from 1 to 10 December estimated to be INR29.5bn (US$324mn).²

Investor interest in gold ETFs continues to strengthen, as reflected in sustained inflows and the broadening of investor participation. Over the first 11 months of 2025 cumulative net inflows reached a record INR313bn (US$3.6bn), while holdings rose by 28.6t – the highest annual addition on record and nearly double that of the previous year. Investor participation has expanded significantly, with 3.4mn new accounts (folios) added between January and November, representing a 152% y/y increase and taking total accounts to 9.8mn.

Assets under management (AUM) of gold ETFs have grown to INR1,105bn (US$12.4bn), lifting their share of total mutual fund AUM from 0.8% at the beginning of the year to 1.4%.

A new gold ETF was launched on 1 December,³ taking the total number of gold ETFs in India to 24. Six gold ETFs have been launched so far in 2025, underscoring the growing depth of the segment.

Chart 3: Resilient inflows

Monthly gold ETF flows in INRbn, and total holdings in tonnes*

RBI gold holdings strengthened by valuation

The Reserve Bank of India’s (RBI) gold accumulation has moderated sharply this year, marking a clear departure from the aggressive buying seen in 2024. Gold has been purchased during just four months this year, with no additions since September, resulting in net purchases of just 4t compared with 72.6t last year. Nevertheless, the central bank’s gold holdings stand at a record 880.2t.

Despite the slowdown in buying, gold’s share in India’s foreign exchange reserves has risen from 10% to 15.6% y/y, largely due to higher gold prices and the growing valuation impact of gold within the reserve’s portfolio.

Chart 4: Gold reserves gain value

RBI’s monthly gold purchases and share in total foreign reserves*

Imports moderate

Gold imports saw a significant decline in November, dropping 73% m/m and 59% y/y to US$4bn, following three consecutive months of growth. This sharp decrease can be attributed to the moderation in post-festive demand. Import volumes for the month are estimated between 32t and 40t.

Total gold imports have reached US$55bn y-t-d, marking a 2% increase over the previous year. However, the volume of imports has fallen by approximately 20% to around 580t, making the value increase purely a factor of higher prices.

Chart 5: Post-festive drop in imports

Monthly gold imports in tonnes and US$bn*

Footnotes

¹Based on portfolio disclosures of various gold ETFs for November 2025.

²Based on World Gold Council’s estimates of fund-wise net inflows from 1 to 10 December 2025.

³Bandhan Gold ETF was launched on 1 December 2025.