Whalesbook
India Tops Gold Jewelry Demand
India has become the world's top gold jewelry consumer for fiscal year 2024-25, overtaking Greater China. This milestone, noted in a joint report by ASSOCHAM and ICRA, underscores India's strong cultural ties to gold, particularly during wedding and festival seasons. These deep-rooted traditions helped India maintain its leading consumer position even as global jewelry volumes declined.
Gold Market Shifts: From Jewelry to Investment
While India leads in jewelry, the global gold market is changing significantly. Gold prices rose about 30% internationally in FY2025, reducing overall jewelry demand. Worldwide, gold jewelry consumption dropped 15% in FY2025 and another 17% in H1 FY2026. India followed this pattern, with jewelry volumes falling around 26% year-on-year in H1 FY2026 as consumer spending decreased. This drop has been largely countered by a surge in investment demand. Globally, demand for gold bars, coins, and ETFs jumped 74% in FY2025 and grew another 60% in H1 FY2026. This signals a key shift from discretionary spending to gold as a safe-haven asset, driven by increased geopolitical risks and record prices. Investment demand is at record highs: global gold ETFs saw 801 tonnes in inflows in 2025, the second-best year, while demand for bars and coins hit a 12-year peak.
Gold Prices Soar Amid Global Uncertainty
Gold prices have risen sharply. Indian domestic prices reached ₹1,84,000 per 10 grams (24K) in late January 2026, after international spot gold hit a record intraday high of $5,595.46 per ounce. In India, prices rose 14% in FY2024, 33% in FY2025, and jumped nearly 50% in the first 10 months of FY2026. This was fueled by a weaker rupee and strong global trends. Analysts expect gold prices to average $5,400 to $6,300 per ounce in 2026, with some forecasting up to $8,000 by 2027. This outlook is based on continued central bank buying, geopolitical risks, and potential US Federal Reserve rate cuts. Central banks have been steady buyers, adding about 863 tonnes in 2025, a trend likely to continue into 2026. This reinforces gold's importance as a strategic reserve amid global financial uncertainty.
Risks to Gold Jewelry Demand
Despite India's strong cultural demand, consistently high gold prices pose a significant risk to jewelry consumption. Sharper price increases, combined with a global economic slowdown and inflation risks from geopolitical tensions, could further reduce discretionary spending. While investment demand remains strong, its volume is highly sensitive to economic shifts and interest rate policies. For example, a stronger US dollar can make gold more expensive for international buyers, putting pressure on prices. The shift away from jewelry means investment flows now drive a large part of the market. These flows can change quickly compared to the deep-rooted cultural demand for jewelry. The shrinking price difference between gold and silver also hints at potential price swings in the precious metals market. The report also noted that while jewelry demand volumes fell, the global value of gold jewelry demand rose 18% to a record $172 billion in 2025, showing increased monetary value despite lower quantities.
Looking Ahead: Gold Market Trends
The gold market is expected to be supported by ongoing geopolitical tensions and central bank strategies. These factors should maintain investment inflows and strong demand for bars and coins. Analyst forecasts for 2026 are generally positive, predicting gold prices to trade between $4,819 and $10,023. While high prices may keep jewelry demand lower, its cultural importance in markets like India and China should ensure a baseline level of consumption. However, the shift towards investment demand is expected to be the main factor shaping the gold market's future.