Investment demand for gold has overtaken traditional jewellery consumption for the first time, signaling a major shift in how Indians treat the metal. With Gold ETF assets nearing ₹1.9 trillion, investors are prioritizing financial formats, though recent import duty hikes and mutual fund restrictions are reshaping the investment landscape.
The Indian gold market has reached a significant turning point in 2026, as the traditional preference for physical jewellery is being eclipsed by financial investment products. In the first quarter of 2026, investment demand—comprising gold bars, coins, and Exchange Traded Funds (ETFs)—surpassed jewellery consumption for the first time on record. This trend highlights a broader transition where gold is increasingly viewed as a core strategic portfolio asset rather than solely a cultural or aesthetic store of wealth.
This shift toward financialisation is being driven by both accessibility and economic strategy. Younger investors and digital-savvy savers are gravitating toward Gold ETFs and digital platforms, which offer lower entry thresholds and higher liquidity compared to physical jewellery. The growth in this segment has been substantial, with Gold ETF assets under management in India climbing to approximately ₹1.9 trillion by October 2026. This migration reflects a move away from the high making charges and storage risks associated with physical ornaments.
However, this evolution does not come without hurdles. The sector is currently managing the impact of policy changes, including the government’s decision in May 2026 to increase effective import duties on gold and silver from 6% to 15%. This policy shift was intended to control foreign exchange outflows, but it has directly influenced domestic gold prices. For jewellery retailers, while the price appreciation has helped maintain revenue growth in value terms, the higher costs have tempered consumer demand volumes.
Regulatory oversight has also intensified as more capital moves into gold-backed financial products. In October 2026, around 17 mutual fund houses temporarily restricted fresh investments in certain Gold ETF Fund-of-Funds to manage inflows and adhere to regulatory guidelines. For investors, this highlights the importance of liquidity management within the gold investment space. While the financialisation of gold provides a transparent and efficient way to participate in the market, it also exposes investors to different risks, such as regulatory caps on inflows and global price volatility that can influence the value of their holdings.
Looking ahead, market participants should track factors that could influence this dynamic. Key monitorables include the impact of high gold prices on discretionary consumer spending, further regulatory adjustments regarding gold-related investment vehicles, and any shifts in global economic conditions that typically drive gold as a hedge. As the industry moves toward more standardized and transparent practices, the distinction between gold as a personal asset and gold as a financial instrument is likely to become even more pronounced for the Indian retail investor.