Image Source: IIFL Finance
India’s gold consumption is expected to decline sharply in 2025, ranging between 600 and 700 metric tonnes, as per the latest update from the World Gold Council. This marks a significant drop from the 802.8 tonnes recorded in 2024, driven primarily by record-high domestic prices that have dampened jewellery demand across the country.
Current Market Dynamics
Domestic gold prices surged to an all-time high of Rs 84,399 per 10 grams in July 2025, reflecting a 10 percent increase year-to-date, following a 21 percent rise in 2024.
Jewellery demand, which traditionally accounts for nearly 70 percent of India’s total gold consumption, has been severely impacted. Households are sticking to fixed budgets, unable to absorb the price escalation.
The June 2025 quarter saw a year-on-year decline in gold consumption, with jewellery purchases falling notably due to price volatility and cautious consumer sentiment.
Investment Demand Gains Momentum
While physical demand has softened, investment interest in gold has surged. Retail investors are increasingly turning to gold ETFs, digital gold platforms, coins, and bars.
Investment demand rose 29 percent in 2024, reaching an 11-year high of 239.4 tonnes. This trend is expected to continue through 2025, as high prices offer attractive returns.
The shift in consumer behavior reflects a growing preference for gold as a financial asset rather than a traditional adornment.
Policy and Economic Influences
The new tax regime introduced in April 2025 has increased disposable income for middle-class households, potentially supporting gold purchases in the latter half of the year.
Analysts suggest that if price volatility stabilizes, jewellery demand could see a gradual recovery, especially during the festive and wedding seasons.
The World Gold Council remains cautiously optimistic, projecting a rebound in demand if macroeconomic conditions improve and consumer confidence returns.
Outlook for H2 2025
Market participants are watching for signs of price stabilization, which could revive retail interest in jewellery.
Continued digitization and financial literacy are expected to boost participation in gold investment products.
Central bank activity and global economic cues will play a critical role in shaping India’s gold demand trajectory for the remainder of the year.
Conclusion
India’s gold market in 2025 is undergoing a structural shift. While traditional jewellery demand has taken a hit due to soaring prices, investment demand is emerging as a resilient pillar. The World Gold Council’s forecast of 600 to 700 tonnes underscores the impact of economic pressures and evolving consumer preferences. The second half of the year will be crucial in determining whether gold’s allure can regain its shine among Indian households.
Source: Economic Times, Businessworld, Hindu BusinessLine – July 31, 2025
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