How high gold prices have affected overall demand: Did investment demand for gold exceed jewelry demand?
New Delhi: The country's bullion market witnessed a significant shift during the quarter ending March 31 this year, as—for the very first time—investment demand for gold surpassed the demand for gold used in jewelry manufacturing.
According to the World Gold Council (WGC), the first quarter of this year saw a sharp surge in purchases of the yellow metal for investment purposes, driven by strong interest in gold coins, bars, and Exchange-Traded Funds (ETFs). Conversely, a decline was observed in jewelry demand. The overall demand for bullion was adversely affected by high gold prices.
Investment demand for the quarter rose by 52 percent
According to the report, investment demand for the quarter rose by 52 percent year-on-year to reach 82 tonnes, while jewelry consumption contracted by 19.5 percent to stand at 66 tonnes. Overall, the country's total gold demand grew by 10.2 percent, reaching 151 tonnes.
The WGC anticipates that this trend is likely to intensify in the coming quarters, as both retail and financial investors continue to increase their allocations in this precious metal.
During the March quarter, the share of investment in total gold consumption stood at 54.3 percent—a significant departure from the norm, where it typically accounts for approximately one-quarter of the total demand.
While the sharp rise in domestic gold prices has fueled investment demand on one hand, it has simultaneously led to a decline in jewelry demand on the other. The price of the yellow metal has nearly doubled since the beginning of 2025.
Gold ETFs have emerged as a primary catalyst for this shift. Investments in this instrument surged by 186 percent year-on-year, reaching a record high of 20 tonnes during the March quarter. Analysts attribute this surge to a growing preference for safe-haven investment options amidst stock market volatility and global uncertainties.