What’s Driving India’s Surging Gold Demand Even as Prices Near One-Month Lows?

Gold demand in India saw a subtle uptick this week as prices slid to their lowest level in nearly a month. Domestic rates dipped to approximately ₹97,700 per 10 grams, down from a recent high of ₹100,555. This correction prompted cautious replenishment by jewellers and tentative buying by consumers after more than a month of muted interest. Despite rising global demand and ongoing investment flows into ETFs, gold consumption in India for 2025 is on track for a five-year low, driven by record-breaking local prices that have dampened traditional jewellery sales. Although investment demand rose modestly in the April–June quarter, it could not offset a sharp drop in retail purchases. Indian gold investors are increasingly showing interest in gold ETFs, with inflows reaching ₹20.81 billion in June. With global uncertainties and volatile trade conditions persisting, gold remains a preferred asset—even as price sensitivity reshapes demand patterns.

Record Prices Push India’s Gold Consumption to Five-Year Low
India’s total gold demand in 2025 is projected to fall between 600 and 700 tonnes, the lowest since 2020, as retail and jewellery purchases slump. Rising prices have curbed consumption even amid rising interest in gold investments. 

Jewellery Demand Suffers While Investment Buoys Demand Slightly
In the April–June quarter, India’s gold consumption dropped 10% year-over-year, with jewellery demand down 17% despite a 7% rise in investment purchases. Reduced bridal and seasonal buying contributed significantly to the decline. 

Price Correction Sparks Renewed Interest Among Buyers
Analysts noted that domestic gold prices corrected to ₹97,700 per 10 g after hitting ₹100,555, attracting cautious consumer interest. Though sales picked up, overall demand remained restrained. 

Dealers Narrow Discounts as Buyers Cautiously Re-enter Market
Gold dealers reduced discounts offered over international benchmarks from $15 to $7 per ounce, reflecting a rebound in footfall and mild optimism as inventories are gradually replenished. 

Gold ETFs Gain Traction as an Investment Alternative
Gold ETFs in India saw inflows surge tenfold from the previous month to ₹20.81 billion in June. Investors are increasingly turning to digital avenues as gold retains its allure as a safe‑haven asset.

Global Drivers Lift Prices Even as Demand Slows
Global gold surpassed $3,400 per ounce, propelled by geopolitical tensions, central bank buying, and safe-haven demand—despite some regulatory shifts. Rising gold prices globally and a weakening rupee amplified the impact domestically. 

India’s Consumption Trends Mirror Regional Patterns
Across Asian hubs like China and India, higher prices and economic headwinds have dampened demand. Yet, a recent pullback in prices created a window for modest recovery in physical buying. 

Central Bank Buying Shows Cooling Momentum
Even though central banks are still net buyers, gold purchases slowed from 243 tonnes in Q1 to 166 tonnes in Q2—yet nearly all still plan to increase holdings within the next year. 

Q2 Global Demand Modestly Up as Investment Shifts
Despite weak jewellery sales, global gold demand rose 3% year‑on‑year in Q2, fueled by ETF investments, bar and coin purchases, and continued reserve diversification. 

Trade Talks and Fed Cues Impact Gold Sentiment
A U.S.–EU trade deal reduced urgency for safe-haven demand, and anticipated Fed policy moves have caused gold prices to stabilize near ₹98,000 per 10 g in India. 

Gold Rebounds as Trade Uncertainty Resurfaces
Prices recovered slightly to around $3,295/oz, supported by new U.S. tariff announcements and global tensions. Gold remains appeal strong amid ongoing political and economic volatility. 

Disclaimer
This article is based solely on verified reporting from Reuters, the World Gold Council, Economic Times, and Metal & Markets data regarding gold demand trends. It contains no promotional content or speculation. Myhospy.com is not responsible for investment decisions made based on this information.