Gold demand in India is expected to soften this festive season as record-high prices weigh on jewellery purchases, despite modest gains in investment demand. India, the world’s second-largest consumer of gold, typically sees strong sales during Dussehra, Diwali, and the wedding season, but soaring costs may limit volumes this year.
Local gold prices surged to an all-time high of 109,840 rupees per 10 grams last week, marking a 42% jump in 2025 after a 21% rise in 2024. With household budgets failing to match the price rally, jewellery demand could fall 10%-15% in volume, said Amit Modak, CEO of PN Gadgil and Sons, at the India Gold Conference in New Delhi.
Last year, December quarter demand reached 265.8 metric tons, supported by a price correction and a government cut in import duties to 6% from 15%. This year, however, the rally may curb buying, though demand in value terms is likely to rise given higher prices. Consumer sentiment has shown resilience in recent weeks, according to Sachin Jain, CEO of the World Gold Council’s India operations, who noted growing investment through gold ETFs as the metal outperforms other assets.
India’s gold demand is crucial for global markets, and slower consumption could cap further price rallies. Yet, weaker imports may ease India’s trade deficit and support the rupee. Retail purchases could see some relief from the government’s recent tax cuts on everyday consumer goods, which may boost disposable income and indirectly benefit jewellery buying, said Harshad Ajmera of JJ Gold House in Kolkata.
While overall demand may be lower in volume, India’s cultural affinity for gold ensures it remains central to festive and wedding celebrations, even at record prices.